SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 11, 1997
U.S. RESTAURANT PROPERTIES, INC.
(Exact name of registrant as specified in charter)
MARYLAND 1-13089 75-2687420
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation or Identification No.)
organization)
5310 Harvest Hill Road
Suite 270
Dallas, Texas 75230
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (972) 387-1487
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ITEM 5. OTHER EVENTS
U.S. Restaurant Properties, Inc. (the "Company") is filing this Current
Report on Form 8-K for purposes of incorporating by reference the exhibits
attached hereto into Part II of the Company's registration statement on Form S-3
(Registration No. 333-34263).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(c) EXHIBITS.
1. Underwriting Agreement entered into between the Company
and PaineWebber Incorporated, Morgan Keegan & Company,
Inc., EVEREN Securities, Inc. and Crowell, Weedon & Co.
2. Articles Supplementary relating to the Company's $1.93
Series A Cumulative Convertible Preferred Stock.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. RESTAURANT PROPERTIES, INC.
Date: November 14, 1997 By: /s/ Robert J. Stetson
-----------------------
Robert J. Stetson
Chief Executive Officer and
President
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION Page No.
1. Underwriting Agreement entered into between the
Company and PaineWebber Incorporated, Morgan
Keegan & Company, Inc., EVEREN Securities, Inc.
and Crowell, Weedon & Co.
2. Articles Supplementary relating to the Company's
$1.93 Series A Cumulative Convertible Preferred
Stock.
3,200,000 Shares
U.S. RESTAURANT PROPERTIES, INC.
$1.93 Series A Cumulative Convertible Preferred Stock
$0.001 Par Value
UNDERWRITING AGREEMENT
November 11, 1997
PAINEWEBBER INCORPORATED
MORGAN KEEGAN & COMPANY, INC.
EVEREN SECURITIES, INC.
CROWELL, WEEDON & CO.
as representatives of the several underwriters,
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Ladies and Gentlemen:
U.S. Restaurant Properties, Inc., a Maryland corporation (together with its
predecessors, the "Company"), confirms its agreement with the Underwriters named
in SCHEDULE A hereto (the "Underwriters") for whom PaineWebber Incorporated,
Morgan Keegan & Company, Inc., EVEREN Securities, Inc. and Crowell, Weedon & Co.
are acting as representatives, as follows:
1. DESCRIPTION OF SHARES.
(a) The Company proposes to issue and sell to the
Underwriters, severally and not jointly, 3,200,000 shares of $1.93
Series A Cumulative Convertible Preferred Stock, par value $0.001 per
share (the "Series A Preferred Stock"). The shares of Series A
Preferred Stock to be issued and sold by the Company are hereinafter
referred to as the "Firm Shares."
(b) In addition, the Company is granting to the
Underwriters an option to purchase up to an additional 480,000 shares
of Series A Preferred Stock on the terms and for the purposes set forth
in Section 12 hereof (the "Option Shares" and, together with the Firm
Shares, the "Shares").
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to and agrees with the Underwriters that:
(a) A registration statement on Form S-3 (File No.
333-34263), with respect to the Shares, including a prospectus, has
been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "1933 Act Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, has been filed
with the Commission and has been declared effective. Such registration
statement and prospectus may have been amended or supplemented prior to
the date of this Underwriting Agreement; any such amendment or
supplement was so prepared and filed, and any such amendment filed
after the effective date of such registration statement has been
declared effective. No stop order suspending the effectiveness of such
registration statement has been issued, and no proceeding for that
purpose has been instituted or threatened by the Commission. A
prospectus supplement (the "Prospectus Supplement") setting forth the
terms of the offering, sale and plan of distribution of the Shares and
additional information concerning the Company and its business has been
or will be so prepared and will be filed pursuant to Rule 424(b) of the
1933 Act Rules and Regulations on or before the second business day
after the date hereof (or such earlier time as may be required by the
1933 Act Rules and Regulations). Copies of such registration statement
and prospectus, any such amendments or supplements and all documents
incorporated by reference therein that were filed with the Commission
on or prior to the date of this Underwriting Agreement (including one
fully executed copy of the registration statement and of each amendment
thereto for the Underwriters and their counsel) have been delivered to
the Underwriters and Underwriters' counsel. The registration statement,
as it may have heretofore been amended, is referred to herein as the
"Registration Statement," and the final form of prospectus included in
the Registration Statement, as supplemented by the Prospectus
Supplement, is referred to herein as the "Prospectus." Any reference
herein to the Registration Statement, the Prospectus, any preliminary
prospectus or any amendment or supplement thereto shall be deemed to
refer to and include the documents incorporated by reference therein,
and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Prospectus
or any preliminary prospectus shall be deemed to refer to and include
the filing after the execution hereof of any document with the
Commission deemed to be incorporated by reference therein. For purposes
of this Underwriting Agreement, all references to the Registration
Statement, the Prospectus, any preliminary prospectus or to any
amendment or supplement thereto shall be deemed to include any copy
filed with the Commission pursuant to its Electronic Data Gathering
Analysis and Retrieval System (EDGAR), and such copy shall be identical
in content to any Prospectus delivered to the Underwriters for use in
connection with the offering of the Shares.
(b) Each part of the Registration Statement, when
such part became or becomes effective, and the Prospectus and any
amendment or supplement thereto, on the date of filing thereof with the
Commission and at the Closing Date (as hereinafter defined), and, if
later, at an Option Closing Date (as hereinafter defined), conformed or
will conform in all material respects with the requirements of the Act
and the 1933 Act
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Rules and Regulations; each part of the Registration Statement, when
such part became or becomes effective, or when such part was filed with
the Commission, did not or will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; the
Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the Commission and at the Closing Date, and, if
later, at an Option Closing Date, did not or will not include an untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; except that the foregoing shall
not apply to statements in, or omissions from, any such document in
reliance upon, and in conformity with, written information concerning
the Underwriters that was furnished to the Company by the Underwriters
specifically for use in the preparation thereof.
(c) The documents incorporated by reference in the
Registration Statement, the Prospectus or any amendment or supplement
thereto, when they became or become effective under the Act or were or
are filed with the Commission under the Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as the case may be,
conformed or will conform in all material respects with the
requirements of the Act, the 1933 Act Rules and Regulations, the
Exchange Act and/or the rules and regulations of the Commission under
the Exchange Act (the "Exchange Act Rules and Regulations"), as
applicable.
(d) The consolidated financial statements of the
Company, together with the related schedules and notes thereto, set
forth or included or incorporated by reference in the Registration
Statement and Prospectus fairly present the financial condition of the
Company and its consolidated subsidiaries as of the dates indicated and
the results of operations, changes in financial position, stockholders'
equity and cash flows for the periods therein specified, in conformity
with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein).
The summary and selected financial and statistical data included or
incorporated by reference in the Registration Statement and the
Prospectus present fairly the information shown therein and, to the
extent based upon or derived from the financial statements, have been
compiled on a basis consistent with the financial statements presented
therein. In addition, the pro forma financial statements of the
Company, and the related notes thereto, included or incorporated by
reference in the Registration Statement and the Prospectus present
fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the basis
described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
Furthermore, all financial statements required by Rule 3-14 of
Regulation S-X ("Rule 3-14") have been included or incorporated by
reference in the Registration Statement and the Prospectus and any such
financial statements are in conformity with the requirements of Rule
3-14. No other financial statements are required to be set forth or to
be incorporated by reference in the Registration Statement or the
Prospectus under the Act or the 1933 Act Rules and Regulations
thereunder.
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(e) Deloitte & Touche LLP, whose reports are
incorporated by reference in the Registration Statement, are and,
during the periods covered by their reports, were independent public
accountants as required by the Act and the 1933 Act Rules and
Regulations.
(f) The Company has been duly formed and is validly
existing as a corporation in good standing under the laws of the State
of Maryland, is duly qualified to do business and is in good standing
in each jurisdiction in which its ownership or lease of property or the
conduct of its business requires such qualification, and has full
corporate power and authority necessary to own or hold its properties,
to conduct the business in which it is engaged and to enter into and
perform its obligations under this Underwriting Agreement. Except for
the Subsidiaries (as hereinafter defined), the Company owns no direct
or indirect equity or other beneficial interest in any corporation,
partnership, joint venture or other business entity.
(g) U.S. Restaurant Properties Operating L.P., a
Delaware limited partnership subsidiary of the Company (the "Operating
Partnership"), has been duly formed and is validly existing as a
limited partnership under the laws of the State of Delaware, is duly
qualified to do business as a foreign limited partnership in each
jurisdiction in which its ownership or lease of property or the conduct
of its business requires such qualification (except where the failure
to be so qualified would not have a material adverse effect on the
earnings, assets or business affairs of the Company and its
Subsidiaries taken as a whole), and has all partnership power and
authority necessary to own or hold its properties and its interests in
its subsidiaries, to conduct the business in which it is engaged and to
enter into and perform its obligations under this Underwriting
Agreement. USRP Managing, Inc., a wholly-owned Delaware corporate
subsidiary of the Company ("USRP Managing"), is the sole general
partner of the Operating Partnership. The Agreement of Limited
Partnership of the Operating Partnership (the "Operating Partnership
Agreement") is in full force and effect, and the aggregate percentage
interests of the Company, USRP Managing and the limited partners in the
Operating Partnership are as set forth in the Prospectus. To the extent
the Shares are issued in accordance with this Underwriting Agreement,
(i) the percentage interest of the partners in the Operating
Partnership will be adjusted accordingly and (ii) the Company will
contribute the proceeds from the sale of the Shares to the Operating
Partnership in exchange for a number of preferred units equal to the
number of Shares issued.
(h) USRP Managing has been duly formed and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, is duly qualified to do business and is in good standing
in each jurisdiction in which its ownership or lease of property or the
conduct of its business requires such qualification (except where the
failure to be so qualified would not have a material adverse effect on
the earnings, assets or business affairs of the Company and its
Subsidiaries taken as a whole), and has all corporate power and
authority necessary to own or hold its assets, to conduct the business
in which it is engaged and to enter into and perform its obligations
under this Underwriting Agreement. All of the issued and outstanding
capital stock of USRP Managing has been duly authorized and validly
issued and is fully paid and non-
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assessable, is owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim, restriction or
equities and has been offered and sold in compliance with all
applicable laws (including, without limitation, federal or state
securities laws). No shares of capital stock of USRP Managing are
reserved for any purpose, and there are no outstanding securities
convertible into or exchangeable for any capital stock of USRP
Managing, and no outstanding options, rights (preemptive or otherwise)
or warrants to purchase or to subscribe for shares of such capital
stock or any other securities of USRP Managing.
(i) All of the subsidiaries (as defined in the 1933
Act Rules and Regulations) of the Company, including the Operating
Partnership and USRP Managing, are listed on SCHEDULE B hereto
(collectively, the "Subsidiaries"). Each of the Subsidiaries has been
duly incorporated or formed, as the case may be, and is an existing
corporation, general or limited partnership, or other legal entity, as
the case may be, in good standing under the laws of its jurisdiction of
incorporation or formation, as the case may be. Each of the
Subsidiaries has full power (corporate and other) and authority to own
or hold its properties and to conduct the business in which it is
engaged, and is duly qualified or registered to do business in each
jurisdiction in which it owns or leases real property or in which the
conduct of its business requires such qualification or registration,
except where the failure to be so qualified or registered, considering
all such cases in the aggregate, would not have a material adverse
effect on the business, properties, financial position or results of
operations of the Company and its Subsidiaries taken as a whole.
(j) All of the issued and outstanding capital stock
or ownership interests of each Subsidiary have been duly authorized and
are validly issued, fully paid and nonassessable and, except for the
8.31% limited partner interest in the Operating Partnership which is
owned by QSV Properties, Inc. ("QSV"), is wholly owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(k) The Company has authorized, issued and
outstanding capital stock as set forth under the caption
"Capitalization" in the Prospectus. All of the issued and outstanding
shares of capital stock of the Company have been duly authorized and
are validly issued, fully paid and nonassessable and conform to the
description thereof in the Registration Statement and the Prospectus.
The stockholders of the Company have no preemptive rights with respect
to the Shares.
(l) The Shares will be as of the Closing Date, and
the Option Shares will be as of any Option Closing Date, duly
authorized by the Company for issuance and sale pursuant to this
Underwriting Agreement; and when issued and delivered by the Company
pursuant to this Underwriting Agreement against payment of the
consideration therefor specified herein, will be validly issued, fully
paid and nonassessable. The Shares conform to the description thereof
in the Registration Statement, the Prospectus and the articles
supplementary determining the terms of the Shares (the "Articles
Supplementary") and will not be subject to any preemptive rights of any
stockholder of the Company.
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(m) Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company and its
Subsidiaries have not incurred any liabilities or obligations, direct
or contingent, or entered into any transactions, not in the ordinary
course of business, that are material to the Company and its
Subsidiaries on a consolidated basis; and there has not been any
material change in the capital stock or structure, short-term debt or
long-term debt of the Company and its Subsidiaries; or any material
adverse change, or any development that is reasonably likely to involve
a prospective material adverse change, in the condition (financial or
other), business, prospects, net worth or results of operations of the
Company and its Subsidiaries on a consolidated basis; and, except for
regular dividends on the Company's common stock, par value $0.001 per
share (the "Common Stock"), in amounts per share that are consistent
with past practice or the charter documents of the Company, there has
been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(n) Except as set forth in the Prospectus, there is
not pending or, to the knowledge of the Company, threatened any
litigation, action, suit or proceeding to which the Company, any of its
Subsidiaries or any of its officers or directors is a party, or that
any of its properties or other assets is the subject of, before or by
any court or governmental agency or body, that is reasonably likely to
result in any material adverse change in the condition (financial or
other), business, prospects, net worth or results of operations of the
Company and its Subsidiaries, or might materially and adversely affect
their properties or other assets.
(o) During the period of at least the last 24
calendar months prior to the date of this Underwriting Agreement, the
Company has timely filed with the Commission all documents and other
material required to be filed pursuant to Sections 13, 14 and 15(d)
under the Exchange Act. During the period of at least the last 36
calendar months preceding the filing of the Registration Statement, the
Company has filed all reports required to be filed pursuant to Sections
13, 14 and 15(d) under the Exchange Act. Immediately preceding the
filing of the Registration Statement, the aggregate market value of the
Company's voting stock held by non-affiliates of the Company was equal
to or greater than $150 million.
(p) There are no contracts or documents of the
Company that are required to be filed as exhibits to the Registration
Statement or to any of the documents incorporated by reference therein
by the Act or the Exchange Act or by the 1933 Act Rules and Regulations
and the Exchange Act Rules and Regulations that have not been so filed.
All of the contracts to which any of the Company or its Subsidiaries is
a party (i) have been duly authorized, executed and delivered by such
entity, constitute valid and binding agreements of such entity and are
enforceable against such entity in accordance with the terms thereof,
except as such enforcement may be limited by (A) bankruptcy,
insolvency, reorganization or similar other laws affecting creditors'
rights generally and (B) general equity principles and limitations on
the availability of equitable relief or (ii) in the case of any
contract to be executed on or before the Closing Date, will on the
Closing
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Date be duly authorized, executed and delivered by the Company and/or a
Subsidiary, and constitute valid and binding agreements of such entity
enforceable against each entity in accordance with the terms thereof,
except as such enforcement may be limited by (A) bankruptcy,
insolvency, reorganization or similar other laws affecting creditors'
rights generally and (B) general equity principles and limitations on
the availability of equitable relief.
(q) The Company has full corporate power and
authority to enter into this Agreement. This Underwriting Agreement has
been duly authorized, executed and delivered by the Company.
(r) The execution and performance of this
Underwriting Agreement and the consummation of the transactions
contemplated herein will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, (i) any
agreement or instrument to which the Company or its Subsidiaries is a
party or by which they are bound or to which any of the property or
other assets of the Company or its Subsidiaries is subject, (ii) the
articles of incorporation, charter, by-laws, certificate of general or
limited partnership, partnership agreement or other organizational
document, as applicable, of the Company or its Subsidiaries, or (iii)
to the best of the Company's knowledge, any statute, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or its Subsidiaries or any of their
properties or other assets; no consent, approval, authorization or
order of, filing with, or notice to any court or governmental agency or
body is required for the consummation of the transactions contemplated
by this Underwriting Agreement in connection with the issuance or sale
of the Shares by the Company, except such as may be required under the
Act and applicable state securities, blue sky, or real estate
syndication laws, if any, or pursuant to the listing requirements of
the New York Stock Exchange ("NYSE") and the Company has full power and
authority to authorize, issue and sell the Shares as contemplated by
this Underwriting Agreement, free of any preemptive rights. The
issuance of the Shares will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, bond, debenture,
note agreement, evidence of indebtedness, contract or other agreement
or instrument to which the Company or its Subsidiaries are a party.
(s) The Company and its Subsidiaries have complied in
all respects with all laws, regulations and orders applicable to them
or their respective businesses; the Company and its Subsidiaries are
not in default under any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note agreement or
evidence of indebtedness, lease, contract or other agreement or
instrument to which they are a party or by which they or any of their
properties or other assets are bound, violation of which would
individually or in the aggregate have a material adverse effect on the
Company and its Subsidiaries on a consolidated basis, and no other
party under any such agreement or instrument to which the Company or
its Subsidiaries are a party is, to the knowledge of the Company, in
default in any material respect thereunder; and the Company and its
Subsidiaries are not in violation of their respective articles of
incorporation, charter, by-
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laws, certificate of general or limited partnership, partnership
agreement or other organizational documents, as the case may be.
(t) Except for those properties listed on SCHEDULE C
below as being subject to leases, the Company and each of its
Subsidiaries have good and marketable title to all properties and
assets, as described in the Prospectus, owned by them, free and clear
of all liens, charges, encumbrances, claims, restrictions or defects,
except such as are described in the Prospectus or are not material in
relation to the business or operations of the Company and its
Subsidiaries, and the Company and its Subsidiaries have valid,
subsisting and enforceable leases for the properties listed on SCHEDULE
C hereto as leased to the Company and its Subsidiaries, with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such properties by the Company and its
Subsidiaries; all liens, charges, encumbrances, claims or restrictions
on or affecting any of the properties or the assets of the Company and
its Subsidiaries which are required to be disclosed in the Prospectus
are disclosed therein; except for the tenants listed on SCHEDULE D
hereto, no tenant under any of the leases pursuant to which the Company
or its Subsidiaries lease their properties has an option or right of
first refusal to purchase the premises demised under such lease; to the
best of the Company's knowledge, the use and occupancy of each of the
properties of the Company and its Subsidiaries complies in all material
respects with all applicable codes and zoning laws and regulations; the
Company and its Subsidiaries have no knowledge of any pending or
threatened condemnation or zoning change that will in any material
respect affect the size of, use of, improvement of, construction on, or
access to any of the properties of the Company and its Subsidiaries;
and the Company and its Subsidiaries have no knowledge of any pending
or threatened proceeding or action that will in any manner materially
affect the size of, use of, improvements or construction on, or access
to any of the properties of the Company or its Subsidiaries.
(u) Title insurance in favor of the Company and its
Subsidiaries is maintained with respect to each of the properties
described in the Prospectus in an amount at least equal to the cost of
acquisition of such property.
(v) The mortgages and deeds of trust encumbering the
properties and assets described or referred to in the Prospectus are
not convertible into the equity securities of the Company or any
Subsidiary.
(w) Except as would not, singularly or in the
aggregate, have a material adverse effect on the condition (financial
or otherwise) or the earnings, business affairs or business prospects
of the Company or any of its Subsidiaries, (i) there does not exist on
any of the properties described in the Prospectus any Hazardous
Materials (as hereinafter defined) in unlawful quantities, (ii) there
has not occurred on or off such properties any unlawful spills,
releases, discharges or disposal of Hazardous Materials and (iii) the
Company and its Subsidiaries have not failed to comply with all
applicable local, state and federal environmental laws, regulations,
ordinances and administrative and judicial orders relating to the
generation, recycling, sale, storage, handling, transport and disposal
of any Hazardous Materials.
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As used herein, "Hazardous Material" shall include, without
limitation, any flammable explosives, radioactive materials, oil,
petroleum, petroleum products, hazardous materials, hazardous wastes,
hazardous or toxic substances, asbestos or any material as defined by
any environmental laws, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended (42 U.S.C. Section 9601, et seq.) (CERCLA), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Section
1801, ET SEQ.), the Resource Conservation and Recovery Act, as amended
(42 U.S C. Section 9601, et seq.), and in the regulations adopted
pursuant to each of the foregoing or by any Federal, state or local
governmental authority having jurisdiction over the properties as
described in the Prospectus.
Except for the 123 Burger King properties in the Company's
portfolio at the time current management took control in May 1994, all
of the properties have been, and it is contemplated that all future
acquisitions will be, subjected to a Phase I or similar environmental
assessment (which generally includes a site inspection, interviews and
a records review, but no subsurface sampling). These assessments and
certain follow-up investigations (including, as appropriate, asbestos,
radon and lead surveys, additional public records review, subsurface
sampling and other testing) of the properties have not revealed any
environmental liability that the Company believes would have a material
adverse effect upon the business, results of operations, prospects or
condition (financial or otherwise) of the Company or any of its
Subsidiaries.
(x) Property and casualty insurance in favor of each
of the Company and its Subsidiaries is maintained with respect to each
of the properties owned or leased by each of them in an amount and on
such items as is reasonable and customary for businesses of this type.
(y) Each national, regional or local restaurant brand
or franchise identified in the Prospectus as a brand or franchise being
operated on a property is in actual operation on such property. Except
as described in the Prospectus, each tenant (a "Tenant") of a property
owned or leased by the Company is in actual possession of such property
under a lease to such Tenant (each, a "Lease"). Except as disclosed in
the Prospectus, each Lease is in full force and effect and neither the
Company nor any of its Subsidiaries has notice of any defense to the
obligations of the Tenant thereunder or any claim asserted or
threatened by any person or entity, which claim would have a material
adverse effect upon the business, results of operations, prospects or
condition (financial or otherwise) of the Company or any of its
Subsidiaries. To the knowledge of the Company, no Tenant of any of the
properties is in default under any of the Leases governing such
properties and there is no event which, but for the passage of time or
the giving of notice, or both, would constitute a material default
under any of such Leases.
(z) Except as disclosed in SCHEDULE E hereto, all
Leases with Tenants are "triple net leases" and generally provide that
the Tenant is responsible for property operating costs, including
property taxes, insurance and maintenance.
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(aa) Except as specifically disclosed in the
Prospectus, there is no material defect in the condition of any
property, the improvements thereon, the structural elements thereof, or
the mechanical systems therein, nor any material damage from casualty
or other cause, nor any soil condition of any such property that will
not support all of the improvements thereon without the need for
unusual or new subsurface excavations, fill, footings, caissons or
other installations, except for (a) ordinary wear and tear and (b) any
such defect, damage or condition that has been corrected or will be
corrected in the ordinary course of the business of such property as
part of the Company's scheduled annual maintenance and improvement
program.
(bb) As a result of, and in connection with, the
merger, effected on October 15, 1997 (the "First Merger"), of USRP
Acquisition, L.P., an indirectly wholly-owned Delaware limited
partnership subsidiary of the Company, with and into U.S. Restaurant
Properties Master L.P., a Delaware limited partnership ("Master L.P."),
(i) USRP Acquisition, L.P. ceased to exist, (ii) Master L.P. became a
wholly-owned direct subsidiary of the Company and (iii) USRP Managing
replaced QSV as the sole general partner of each of Master L.P. and the
Operating Partnership. Following the completion of the First Merger and
the Conversion (as defined in the Prospectus), (i) the Company owned
100% of the issued and outstanding capital stock of USRP Managing and a
99% limited partner interest in Master L.P., (ii) USRP Managing owned a
1% general partner interest in Master L.P. and a 1% general partner
interest in the Operating Partnership, (iii) Master L.P. owned a 90.69%
limited partner interest in the Operating Partnership and (iv) QSV
owned an 8.31% limited partner interest in the Operating Partnership.
As a result of the merger, to be effected prior to the Closing Date
(the "Second Merger" and, together with the First Merger, the
"Mergers"), of Master L.P. with and into the Operating Partnership, (i)
Master L.P. will cease to exist and (ii) the Operating Partnership will
become a direct subsidiary of the Company. Following the completion of
the Second Merger, (i) the Company will continue to own 100% of the
issued and outstanding capital stock of USRP Managing and will own a
90.69% limited partner interest in the Operating Partnership, (ii) USRP
Managing will continue to own a 1% general partner interest in the
Operating Partnership and (iii) QSV will continue to own an 8.31%
limited partner interest in the Operating Partnership. In accordance
with the terms of their respective organizational documents and the
applicable laws of their respective jurisdictions, each of the Company,
Master L.P., the Operating Partnership, USRP Managing, USRP
Acquisition, L.P. and QSV received the necessary approval from their
respective security holders and, where applicable, boards of directors
to participate in, and to consummate, the Mergers, the Conversion and
the other transactions related thereto as set forth in, or incorporated
by reference into, the Prospectus (the "Related Transactions"). The
First Merger has become effective under the applicable laws of, and the
related certificates of merger have been duly filed in, the State of
Delaware, and the Second Merger will become effective, prior to the
Closing Date, under the applicable laws of, and the related
certificates of merger will be duly filed in, the State of Delaware.
(cc) The consummation of the Mergers, the Conversion
and the Related Transactions did not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, (i)
any statute, agreement or instrument to which the
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Company or its Subsidiaries is a party or by which they are bound or to
which any of the property or other assets of the Company or its
Subsidiaries is subject, (ii) the articles of incorporation, charter,
by-laws, certificate of general or limited partnership, partnership
agreement or other organizational document, as applicable, of the
Company or its Subsidiaries, or (iii) any statute, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or its Subsidiaries or any of their
properties or other assets.
(dd) The Proxy Statement/Prospectus delivered to
limited partners in Master L.P. in connection with the solicitation of
their approval of the First Merger (the "Proxy"), when such Proxy was
declared effective by the Commission and on the date of the Special
Meeting (as such term is defined in the Proxy), conformed in all
material respects with the requirements of the Act, the Exchange Act,
the 1933 Act Rules and Regulations and the Exchange Act Rules and
Regulations; the Proxy, on the date it was declared effective by the
Commission and on the date of the Special Meeting, did not include an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(ee) No holder of outstanding shares of capital stock
of the Company has any rights to the registration of shares of capital
stock of the Company which would or could require such securities to be
included in the Registration Statement.
(ff) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
except as described therein, (i) there has not been any material
adverse change in the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company or any of its Subsidiaries, whether or not arising from
transactions in the ordinary course of business; (ii) neither the
Company nor any of its Subsidiaries has sustained any material loss or
interference with its assets, businesses or properties (whether owned
or leased) from fire, explosion, earthquake, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or any
court or legislative or other governmental action, order or decree; and
(iii) neither the Company nor any of its Subsidiaries has undertaken
any liability or obligation, direct or contingent, except such
liabilities or obligations undertaken in the ordinary course of
business.
(gg) The Company has filed all federal, state, local,
franchise and foreign income tax returns which have been required to be
filed and has paid all taxes indicated by said returns and all
assessments received by it to the extent that such taxes have become
due, and the Company has no knowledge, after due inquiry, of any tax
deficiency which has been asserted or threatened against the Company.
To the knowledge of the Company, there are no tax returns of the
Company or any of its Subsidiaries that are currently being audited by
state, local or federal taxing authorities or agencies which would have
a material adverse effect on the financial position, stockholders'
equity, results of operations, business or prospects of the Company and
its Subsidiaries.
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(hh) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with
the execution and delivery by the Company of this Underwriting
Agreement and the consummation of the transactions herein contemplated
has been obtained or made and is in full force and effect.
(ii) The Company and its Subsidiaries hold all
material licenses, certificates and permits from governmental
authorities which are necessary to the conduct of their businesses and
are in compliance with the terms and conditions of such licenses,
certificates and permits; and the Company and its Subsidiaries have not
infringed on any patents, patent rights, trade names, trademarks or
copyrights, which infringement is material to the business of the
Company and its Subsidiaries taken as a whole.
(jj) The Company and its Subsidiaries are conducting
their respective businesses in material compliance with all applicable
laws, rules and regulations of the jurisdictions in which they are
conducting business, including, without limitation, the Americans with
Disabilities Act of 1990 and all applicable local, state and federal
employment, truth-in-advertising, franchising and immigration laws and
regulations, except where the failure to be so in compliance would not
have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole.
(kk) No transaction has occurred between or among the
Company and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be
described in and is not described or incorporated by reference in the
Registration Statement and the Prospectus.
(ll) The Company has not taken, nor will it take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization
or manipulation of the price of any capital stock of the Company or the
Series A Preferred Stock to facilitate the sale or resale of any of the
Shares.
(mm) Commencing with the taxable year ending on
December 31, 1997, the Company will be organized and operated in
conformity with the requirements for qualification as a "real estate
investment trust" under the Internal Revenue Code of 1986, as amended
(the "Code"). The Company's method of operation will permit it to meet
and to continue to meet the requirements for taxation as a real estate
investment trust under the Code. The Company has no intention of
changing its operations or engaging in activities which would cause it
to fail to qualify, or make economically undesirable its continued
qualification, as a real estate investment trust.
(nn) Neither the Company nor any Subsidiary is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
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(oo) The Shares have been approved for listing on
the NYSE, subject to official notice of issuance.
(pp) The Company and its Subsidiaries maintain a
system of internal accounting controls which the Company believes is
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
the preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to financial assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(qq) Neither the Company or any of its Subsidiaries
nor, to the knowledge of the Company, any employee or agent of the
Company or any Subsidiary, has made any payment of funds of the Company
or any Subsidiary or received or retained any funds in violation of any
law, rule or regulation or of a character required to be disclosed in
the Prospectus.
(rr) The Company has not distributed and, prior to
the later to occur of (i) the Closing Date or (ii) completion of the
distribution of the Shares, will not distribute any offering material
in connection with the offering and sale of the Shares other than the
Registration Statement, the Prospectus or other materials, if any,
permitted by the Act.
3. PURCHASE, SALE AND DELIVERY OF FIRM SHARES. On the basis of
the representations, warranties and agreements contained herein, but subject to
the terms and conditions set forth herein, the Company agrees to issue and sell
the Shares, severally and not jointly, to the several Underwriters, and each of
the Underwriters, severally and not jointly, agrees to purchase from the
Company, the number of Shares set forth opposite that Underwriter's name in
SCHEDULE A hereto, at a purchase price of $23.97 per share (the "Purchase
Price").
The Shares to be purchased by the Underwriters will be
delivered by the Company to the office of PaineWebber Incorporated at 1285
Avenue of the Americas, New York, New York 10019, in accordance with the terms
of this Underwriting Agreement and against payment of the Purchase Price
therefor by wire transfer of same day funds payable to the order of the Company
in the amount of $76,704,000 at the bank account designated in writing by the
Company at least one business day prior to the Closing Date, at 10:00 a.m., New
York time, on November 17, 1997 (or if the NYSE or American Stock Exchange or
commercial banks in the City of New York are not open on such day, the next day
on which such exchanges and banks are open), or at such other time not later
than eight full business days thereafter as the Underwriters and the Company
mutually agree, such time being herein referred to as the "Closing Date." If
requested by the Underwriters, the Shares will be prepared in definitive form
and in such authorized denominations and registered in such names as the
Underwriters may request upon at least two business days' prior notice to the
Company and will be made available for checking and packaging at the office of
PaineWebber Incorporated at least one business day prior to the Closing Date.
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<PAGE>
4. COVENANTS. The Company covenants and agrees with the
Underwriters that:
(a) The Company will cause the Prospectus Supplement
to be filed as required by Section 2(a) hereof (but only if the
Underwriters or their counsel have not reasonably objected thereto by
notice to the Company after having been furnished a copy a reasonable
time prior to filing) and will notify the Underwriters promptly of such
filing. During the period in which a prospectus relating to the Shares
is required to be delivered under the Act or such date which is 90 days
after the Closing Date, whichever is later, the Company will notify the
Underwriters promptly of the time when any subsequent amendment to the
Registration Statement has become effective or any subsequent
supplement to the Prospectus has been filed, or of any request by the
Commission for any amendment or supplement to the Registration
Statement or Prospectus or for additional information; the Company will
prepare and file with the Commission, promptly upon the Underwriters'
request, any amendments or supplements to the Registration Statement or
Prospectus that, in the Underwriters' opinion, may be necessary or
advisable in connection with the Underwriters' distribution of the
Shares; and the Company will file no amendment or supplement to the
Registration Statement or Prospectus (other than any prospectus
supplement relating to the offering of other securities registered
under the Registration Statement or any document required to be filed
under the Exchange Act that upon filing is deemed to be incorporated by
reference therein) to which the Underwriters or their counsel shall
reasonably object by notice to the Company after having been furnished
a copy a reasonable time prior to the filing.
(b) The Company will advise the Underwriters,
promptly after it shall receive notice or obtain knowledge thereof, of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, of the suspension of the
qualification or registration of the Shares for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for
any such purpose; and it will promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such a
stop order should be issued.
(c) The Company will comply with all requirements
imposed upon it by the Act, the 1933 Act Rules and Regulations, the
Exchange Act and the Exchange Act Rules and Regulations as from time to
time in force, so far as necessary to permit the continuance of sales
of, or dealings in, the Shares as contemplated by the provisions hereof
and the Prospectus. If during such period where a prospectus relating
to the Shares is required to be delivered under the Act or such date
which is 90 days after the Closing Date, whichever is later, any event
occurs as a result of which, in the opinion of Underwriters' counsel,
the Registration Statement contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or the
Prospectus as then amended or supplemented contains an untrue statement
of a material fact or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statement or
Prospectus to comply with the Act, the Company will promptly notify the
Underwriters and will amend or supplement the
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<PAGE>
Registration Statement or Prospectus (at the expense of the Company) so
as to correct such statement or omission or effect such compliance.
(d) The Company will furnish to the Underwriters
copies of the Registration Statement, the Prospectus (including all
documents incorporated by reference therein), each preliminary
prospectus and all amendments and supplements to the Registration
Statement and Prospectus that are filed with the Commission during the
period in which a prospectus relating to the Shares is required to be
delivered under the Act or such date which is 90 days after the Closing
Date, whichever is later (including all documents filed with the
Commission during such period that are deemed to be incorporated by
reference therein), in each case as soon as available and in such
quantities as the Underwriters may from time to time reasonably
request.
(e) During the period of five years commencing on the
date upon which the Prospectus Supplement is filed pursuant to Rule
424(b) under the Act, the Company will furnish the Underwriters with
copies of filings of the Company under the Act and Exchange Act and
with all other financial statements and periodic and special reports it
distributes generally to the holders of any class of its capital stock.
(f) The Company will make generally available to its
stockholders as soon as practicable, and in the manner contemplated by
Rule 158 of the 1933 Act Rules and Regulations but in any event not
later than 15 months after the end of the Company's current fiscal
quarter, an earning statement (which need not be audited) covering a
12- month period beginning after the date upon which the Prospectus
Supplement is filed pursuant to Rule 424(b) under the Act that shall
satisfy the provisions of Section 11(a) of the Act and Rule 158 of the
1933 Act Rules and Regulations and will advise the Underwriters in
writing when such statement has been made available.
(g) Whether or not the transactions contemplated by
this Underwriting Agreement are consummated or this Underwriting
Agreement is terminated, the Company will pay, or reimburse if paid by
the Underwriters, all costs and expenses incident to the performance of
the obligations of the Company under this Underwriting Agreement,
including but not limited to costs and expenses of or relating to (i)
the preparation, printing and filing of the Registration Statement and
exhibits thereto, each preliminary prospectus, the Prospectus and any
amendment or supplement to the Registration Statement or the
Prospectus, (ii) the preparation and delivery of certificates
representing the Shares, (iii) the word processing, printing and
reproduction of this Underwriting Agreement, (iv) the costs incurred by
the Company in furnishing (including costs of shipping, mailing and
courier) such copies of the Registration Statement, the Prospectus and
any preliminary prospectus, and all amendments and supplements thereto,
as may be requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be
sold, (v) the listing of the Shares on the NYSE, (vi) the registration
or qualification of the Shares for offer and sale under the securities
or blue sky laws of such jurisdictions designated by the Underwriters
or the notification with respect thereto required by any such
jurisdiction, including the fees, disbursements and other charges of
Underwriters' counsel in connection therewith, and the
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<PAGE>
preparation and printing of blue sky memoranda, (vii) counsel to the
Company, (viii) the transfer agent for the Shares and (ix) the
accountants of the Company.
(h) If this Underwriting Agreement shall be
terminated pursuant to Section 8 hereof or if for any reason the
Company shall be unable to perform its obligations hereunder, the
Company will reimburse the Underwriters for all out-of-pocket expenses
(including the fees, disbursements and other charges of Underwriters'
counsel) reasonably incurred by the Underwriters in connection
herewith.
(i) The Company will not at any time, directly or
indirectly, take any action designed to, or which might reasonably be
expected to, cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization of the
price of its capital stock to facilitate the sale or resale of any of
the Shares.
(j) The Company will apply the net proceeds from the
sale of the Shares as set forth under the caption "Use of Proceeds" in
the Prospectus Supplement.
(k) The Company, its executive officers and the
members of its Board of Directors and QSV will not, directly or
indirectly, offer, sell, contract to sell, pledge, grant any option to
purchase or otherwise dispose of any shares of capital stock, or any
securities convertible into, or exercisable, exchangeable or redeemable
for, shares of capital stock, or register for sale under the Act any
shares of capital stock, or any securities convertible into, or
exercisable, exchangeable or redeemable for, shares of capital stock,
except for the sale of the Shares by the Company, for a period of 180
days from the date of the Prospectus Supplement, without the prior
written consent of PaineWebber Incorporated.
(l) Commencing with its taxable year ending December
31, 1997, the Company will elect to, and continue to qualify as a "real
estate investment trust" under the Code, and will use its best efforts
to continue to meet the requirements to qualify as a "real estate
investment trust."
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The Underwriters'
obligation to purchase and pay for the Shares as provided herein shall be
subject to the accuracy, as of the date hereof and the Closing Date (as if made
at the Closing Date), of the representations and warranties of the Company
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) The Registration Statement shall have been
declared effective under the Act; the Prospectus shall have been filed
as required by Section 2(a) hereof; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceeding for that purpose shall have been instituted or, to the
Underwriters' knowledge or the knowledge of the Company, threatened by
the Commission, nor has any state securities authority suspended the
qualification or registration of the Shares for offering or sale in any
jurisdiction and any request of the Commission for additional
information (to be included in the Registration Statement or
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<PAGE>
the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Underwriters and Underwriters' counsel.
(b) The Underwriters shall not have advised the
Company that the Registration Statement or any amendment thereto
contains an untrue statement of fact that in the opinion of the
Underwriters or Underwriters' counsel is material or omits to state a
fact that in the opinion of the Underwriters or Underwriters' counsel
is material, and is required to be stated therein or is necessary to
make the statements therein not misleading, or that the Prospectus, or
any amendment or supplement thereto, contains an untrue statement of
fact that in the opinion of the Underwriters or Underwriters' counsel
is material or omits to state a fact that in the opinion of the
Underwriters or Underwriters' counsel is material and is necessary, in
the light of the circumstances under which they were made, to make the
statements therein not misleading.
(c) Except as contemplated in the Prospectus
Supplement, subsequent to the respective dates as of which information
is included or incorporated by reference in the Registration Statement
and the Prospectus, there shall not have been any change, on a
consolidated basis, in the equity capitalization, short-term debt or
long-term debt of the Company, or any adverse change, or any
development involving a prospective adverse change, in the condition
(financial or other), business, prospects, net worth or results of
operations of the Company or its Subsidiaries or any adverse change in
the rating assigned to any securities of the Company, that, in the
Underwriters' judgment, makes it impractical or inadvisable to offer or
deliver the Shares on the terms and in the manner contemplated in the
Prospectus.
(d) Winstead Sechrest & Minick P.C., counsel for the
Company, shall have furnished to the Underwriters its written opinion,
as counsel to the Company, addressed to the Underwriters and dated such
Closing Date, in form and substance satisfactory to the Underwriters,
to the effect that:
(i) Each of the Company, the Operating
Partnership, Master L.P. and USRP Managing has been duly
incorporated or formed, as the case may be, and is validly
existing as a corporation, general or limited partnership, or
other legal entity, as the case may be, in good standing under
the laws of its jurisdiction of incorporation or formation, as
the case may be, and has full power (corporate or other) and
authority to own or hold its properties and to conduct the
business in which it is engaged, and is duly qualified or
registered to do business in each jurisdiction listed on a
schedule attached to such counsel's opinion. All of the issued
and outstanding capital stock or ownership interests of each
of the Operating Partnership, Master L.P. and USRP Managing
have been duly authorized and are validly issued, fully paid
and nonassessable and, except for the 8.31% limited partner
interest in the Operating Partnership owned by QSV, are
wholly-owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity;
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(ii) The Company has authorized, issued and
outstanding capital stock as set forth under the caption
"Capitalization" in the Prospectus; all of the issued and
outstanding shares of capital stock of the Company have been
duly and validly authorized and issued; and all of the issued
and outstanding shares of capital stock of the Company are
fully paid and nonassessable and none of them was issued in
violation of any preemptive or other similar right. The Shares
have been duly authorized by the Company for issuance and sale
and when issued and sold pursuant to this Underwriting
Agreement will be duly and validly issued, fully paid and
nonassessable and none of them will have been issued in
violation of any preemptive or other similar right. Except as
disclosed in the Registration Statement and the Prospectus,
there is no outstanding option, warrant or other right calling
for the issuance of, and, to the knowledge of such counsel, no
commitment, plan or arrangement to issue, any share of capital
stock of the Company or any security convertible into,
exercisable for, or exchangeable for capital stock of the
Company. To the best of such counsel's knowledge, no holder of
any security of the Company has the right to have any security
owned by such holder included for registration in the
Registration Statement or to demand registration of any
security owned by such holder during the 180 days after the
date of this Underwriting Agreement. The issued and
outstanding capital stock of the Company and the Shares
conform, or will conform, in all material respects to the
descriptions thereof contained in the Registration Statement,
the Prospectus and the Articles Supplementary, as the case may
be. The form of certificate used to evidence the Shares is in
due and proper form and complies with all applicable statutory
requirements, with any applicable requirements of the
Company's organizational documents and with the requirements
of the NYSE;
(iii) The Registration Statement has become
effective under the Act, the Prospectus Supplement has been
filed as required by Section 2(a) hereof and, to the best
knowledge of such counsel, after due inquiry, no stop order
suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been
instituted or threatened by the Commission;
(iv) Each part of the Registration
Statement, when such part became effective, and the Prospectus
and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the Closing Date, complied
as to form in all material respects with the requirements of
the Act and the 1933 Act Rules and Regulations, and such
counsel has no reason to believe that either (i) any part of
the Registration Statement, when such part became effective or
was filed under the Act or Exchange Act, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Prospectus and
any amendment or supplement thereto, on the date of filing
thereof with the Commission or at the Closing Date, included
an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and the documents (excluding any exhibits thereto)
incorporated by
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reference in the Registration Statement or Prospectus or any
amendment or supplement thereto, when they became effective
under the Act or were filed with the Commission under the Act
or Exchange Act, as the case may be, complied as to form in
all material respects with the requirements of the Act, the
Exchange Act, the 1933 Act Rules and Regulations or the
Exchange Act Rules and Regulations, as applicable; it being
understood that such counsel need express no opinion as to the
financial statements or other financial data included in any
of the documents mentioned in this clause;
(v) The descriptions in the Registration
Statement and Prospectus of statutes, legal and governmental
proceedings, contracts and other documents are accurate and
fairly present the information required to be shown; and such
counsel does not know of any statutes or legal or governmental
proceedings required to be described in the Prospectus that
are not described as required, or of any contracts or
documents of a character required to be described in the
Registration Statement or Prospectus (or required to be filed
under the Exchange Act if upon such filing they would be
incorporated by reference therein) or to be filed as exhibits
to the Registration Statement that are not described and filed
as required;
(vi) This Underwriting Agreement and the
Articles Supplementary have been duly authorized, executed and
delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable against it in
accordance with their terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles; the execution, delivery and performance
of this Underwriting Agreement and the consummation of the
transactions contemplated herein, including the issuance of
the Shares, will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under,
(a) any statute, indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note
agreement or evidence of indebtedness, lease, contract or
other agreement or instrument known to such counsel to which
the Company or its Subsidiaries are a party or by which they
are bound or to which any of the property or other assets of
the Company or its Subsidiaries is subject, (b) the articles
of incorporation, charter, by-laws, certificate of general or
limited partnership, partnership agreement, or other
organizational document of the Company or any of its
Subsidiaries, as applicable, or (c) any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or its
Subsidiaries or any of their properties or other assets; and
no consent, approval, authorization, notice to, order of, or
filing with, any court or governmental agency or body is
required for the consummation of the transactions contemplated
by this Underwriting Agreement in connection with the issuance
or sale of the Shares by the Company, except such as have been
obtained under the Act or from the NYSE;
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(vii) Commencing with the taxable year
ending December 31, 1997, the Company will be organized and
operated in conformity with the requirements for qualification
as a "real estate investment trust" under the Code. The
Company's method of operation will permit it to meet and to
continue to meet the requirements for taxation as a "real
estate investment trust" under the Code. The federal income
tax treatment described in the Prospectus under the caption
"Federal Income Tax Considerations" is accurate;
(viii) The agreement of each of the Company
and QSV that for a period of 180 days from the date of the
Prospectus Supplement they will not, except for the sale of
the Shares by the Company, without the prior written consent
of PaineWebber Incorporated, offer, sell, contract to sell,
grant any option to sell, or otherwise dispose of, directly or
indirectly, any share of capital stock or securities
convertible into or exchangeable for, or any rights to
purchase or acquire, shares of capital stock owned by them,
has been duly and validly executed and delivered by them and
constitutes the legal, valid and binding obligation of the
Company and QSV, as the case may be, enforceable against them
in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles;
(ix) To the best of such counsel's
knowledge, neither the Company nor any of its Subsidiaries is
in violation of any term or provision of their respective
articles of incorporation, charter, by-laws, certificate of
general or limited partnership, partnership agreement or other
organizational document, as applicable, or in violation of or
default under any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note
agreement or evidence of indebtedness, lease, contract,
permit, judgment, decree, order, statute, rule or regulation;
(x) To the best of such counsel's knowledge,
there is no litigation or governmental or other proceeding or
investigation, before any court or before or by any public
body or board pending or threatened against, or involving the
assets, properties or businesses of, the Company or any of its
Subsidiaries, involving the Company's or any of its
Subsidiaries' officers or directors or to which any of the
Company's or any of its Subsidiaries' properties or other
assets are subject which would have a material adverse effect
upon the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole;
(xi) Neither the Company nor any of its
Subsidiaries is an "investment company" within the meaning of
the Investment Company Act of 1940, as amended;
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(xii) Following the completion of the First
Merger and the Conversion, (i) the Company owned 100% of the
issued and outstanding capital stock of USRP Managing and a
99% limited partner interest in Master L.P., (ii) USRP
Managing owned a 1% general partner interest in Master L.P.
and a 1% general partner interest in the Operating
Partnership, (iii) Master L.P. owned a 90.69% limited partner
interest in the Operating Partnership and (iv) QSV owned an
8.31% limited partner interest in the Operating Partnership.
Following the completion of the Second Merger, (i) the Company
owns 100% of the issued and outstanding capital stock of USRP
Managing and a 90.69% limited partner interest in the
Operating Partnership, (ii) USRP Managing owns a 1% general
partner interest in the Operating Partnership and (iii) QSV
owns an 8.31% limited partner interest in the Operating
Partnership. In accordance with the terms of their respective
organizational documents and the applicable laws of their
respective jurisdictions, each of the Company, Master L.P.,
the Operating Partnership, USRP Managing, USRP Acquisition,
L.P. and QSV received the necessary approval from their
respective security holders and, where applicable, boards of
directors to participate in, and to consummate, the Mergers,
the Conversion and the Related Transactions. The Mergers have
become effective under the applicable laws of, and the related
certificates of merger have been duly filed in, the State of
Delaware; and
(xiii) The consummation of the Mergers, the
Conversion and the Related Transactions did not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, (i) any statute, agreement or
instrument to which the Company or its Subsidiaries is a party
or by which they are bound or to which any of the property or
other assets of the Company or its Subsidiaries is subject,
(ii) the articles of incorporation, charter, by-laws,
certificate of general or limited partnership, partnership
agreement or other organizational document, as applicable, of
the Company or its Subsidiaries, or (iii) any statute, order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or its Subsidiaries or
any of their properties or other assets.
(e) Middleberg, Riddle & Gianna, counsel for the
Company, shall have furnished to the Underwriters its written opinion,
as counsel to the Company, addressed to the Underwriters and dated such
Closing Date, in form and substance satisfactory to the Underwriters,
to the effect that:
(i) Each of the Company's Subsidiaries
(other than the Operating Partnership, Master L.P. and USRP
Managing) has been duly incorporated of formed, as the case
may be, and is validly existing as a corporation, general or
limited partnership, or other legal entity, as the case may
be, in good standing under the laws of its jurisdiction of
incorporation or formation, as the case may be, and has full
power (corporate or other) and authority to own or hold its
properties and to conduct the business in which it is engaged,
and is duly qualified or registered to do business in each
jurisdiction in
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which it owns or leases real property or in which the conduct
of its business requires such qualification or registration,
except where the failure to be so qualified or registered,
considering all such cases in the aggregate, does not involve
a material risk to the business, properties, financial
position or results of operations of the Company and its
Subsidiaries taken as a whole. All of the issued and
outstanding capital stock or ownership interests of each
Subsidiary (other than the Operating Partnership, Master L.P.
and USRP Managing) have been duly authorized and are validly
issued, fully paid and nonassessable and are wholly-owned by
the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; and
(ii) To the best of such counsel's
knowledge, no holder of any security of the Company has the
right to have any security owned by such holder included for
registration in the Registration Statement or to demand
registration of any security owned by such holder during the
180 days after the date of this Underwriting Agreement.
(f) Piper & Marbury L.L.P. shall have furnished to
the Underwriters its written opinion, as special Maryland counsel to
U.S. Restaurant Properties, Inc., addressed to the Underwriters and
dated such Closing Date, in form and substance satisfactory to the
Underwriters, to the effect that:
(i) U.S. Restaurant Properties, Inc. has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of
Maryland and is in good standing with the State Department of
Assessments and Taxation of Maryland, and has full corporate
power and authority to own or hold its properties and to
conduct its business as described in the Registration
Statement and Prospectus, and to enter into and perform its
obligations under this Underwriting Agreement;
(ii) U.S. Restaurant Properties, Inc. (and
not its predecessors) has authorized, issued and outstanding
capital stock as set forth under the caption "Capitalization"
in the Prospectus; all of the issued and outstanding shares of
capital stock of U.S. Restaurant Properties, Inc. have been
duly and validly authorized and issued; and all of the issued
and outstanding shares of capital stock of U.S. Restaurant
Properties, Inc. are fully paid and nonassessable and none of
them was issued in violation of any preemptive or other
similar right under the charter of U.S. Restaurant Properties,
Inc. or Maryland law. The Shares have been duly authorized
by U.S. Restaurant Properties, Inc. for issuance and sale
and when issued and sold pursuant to this Underwriting
Agreement will be duly and validly issued, fully paid and
nonassessable and none of them will have been issued in
violation of any preemptive or other similar right under the
charter of U.S. Restaurant Properties, Inc. or Maryland law.
The issued and outstanding capital stock of U.S. Restaurant
Properties, Inc. and the Shares conform, or will conform, in
all material respects to the descriptions thereof contained
in the Registration Statement, the Prospectus and the Articles
Supplementary, as the case
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may be. The form of certificate used to evidence the Shares is
in due and proper form and complies with all applicable
statutory requirements under Maryland law and with any
applicable requirements of the charter and by-laws of U.S.
Restaurant Properties, Inc.;
(iii) This Underwriting Agreement and the
Articles Supplementary have been duly authorized by U.S.
Restaurant Properties, Inc.; the execution, delivery and
performance of this Underwriting Agreement and the
consummation of the transactions contemplated herein,
including the issuance of the Shares, will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, (a) any statute under Maryland
law to which U.S. Restaurant Properties, Inc. is bound or to
which any of the property or other assets of U.S. Restaurant
Properties, Inc. is subject, (b) the charter or by- laws of
U.S. Restaurant Properties, Inc. or (c) except as may be
required under the blue sky laws of the State of Maryland, any
order, rule or regulation known to such counsel of any court
or governmental agency or body of the State of Maryland that
has jurisdiction over U.S. Restaurant Properties, Inc. or any
of its properties or other assets; and except such as may be
related to the filing of the Articles Supplementary or may be
required under the blue sky laws of the State of Maryland, no
consent, approval, authorization, notice to, order of, or
filing with, any court or governmental agency or body of the
State of Maryland is required to be obtained by U.S.
Restaurant Properties, Inc. for the consummation of the
transactions contemplated by this Underwriting Agreement in
connection with the issuance or sale of the Shares by U.S.
Restaurant Properties, Inc.; and
(iv) To the best of such counsel's
knowledge, there is no litigation or governmental or other
proceeding or investigation, before any court or before or by
any public body or board pending or threatened against, or
involving the assets, properties or businesses of, U.S.
Restaurant Properties, Inc. or any of its Subsidiaries,
involving U.S. Restaurant Properties, Inc.'s or any of its
Subsidiaries' officers or directors or to which any of U.S.
Restaurant Properties, Inc.'s or any of its Subsidiaries'
properties or other assets are subject which would have a
material adverse effect upon the assets or properties,
business, results of operations, prospects or condition
(financial or otherwise) of U.S. Restaurant Properties, Inc.
and its Subsidiaries taken as a whole.
(g) The Underwriters shall have received from Rogers
& Wells, counsel to the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to the validity of the Shares, the
Registration Statement, the Prospectus and other related matters as the
Underwriters reasonably may request, and such counsel shall have
received such papers and information as they request to enable them to
pass upon such matters.
(h) At the time of execution of this Underwriting
Agreement and at the Closing Date, the Underwriters shall have received
a letter, dated the date of delivery thereof, from Deloitte & Touche
LLP, the independent public accountants of the Company, in the form
previously agreed to by the Underwriters.
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<PAGE>
(i) The Underwriters shall have received from the
Company a certificate, signed by the President or the Chairman of the
Board and by the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that, to the best of
their knowledge based upon reasonable investigation:
(i) The representations and warranties of
the Company in this Underwriting Agreement are true and
correct, as if made at and as of the Closing Date, and the
Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) No stop order suspending the
effectiveness of the Registration Statement has been issued,
and no proceeding for that purpose has been instituted or is
threatened by the Commission nor has any state securities
authority suspended the qualification or registration of the
Shares for offering or sale in any jurisdiction;
(iii) Since the effective date of the
Registration Statement, there has occurred no event required
to be set forth in an amendment or supplement to the
Registration Statement or Prospectus that has not been so set
forth, and there has been no document required to be filed
under the Exchange Act and the Exchange Act Rules and
Regulations of the Commission thereunder that upon such filing
would be deemed to be incorporated by reference in the
Prospectus that has not been so filed;
(iv) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (a) there has not been, and no development has
occurred which could reasonably be expected to result in, a
material adverse change in the general affairs, business,
business prospects, properties, management, condition
(financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business,
in each case other than as set forth in or contemplated by the
Registration Statement and the Prospectus and (b) neither the
Company nor any of its Subsidiaries has sustained any material
loss or interference with its business or properties from
fire, explosion, flood or other casualty, whether or not
covered by insurance, or from any labor dispute or any court
or legislative or other governmental action, order or decree,
which is not set forth in the Registration Statement and the
Prospectus; and
(v) such other matters as the Underwriters
or Underwriters' counsel may reasonably request.
(j) On or prior to the Closing Date, the Underwriters
shall have received the executed agreements referred to in Section
4(k).
(k) Prior to the Closing Date, the Shares shall have
been duly authorized for listing by the NYSE, subject to official
notice of issuance.
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(l) All such opinions, certificates, letters and
other documents will be in compliance with the provisions hereof only
if they are satisfactory in form and substance to the Underwriters or
Underwriters' counsel. The Company will furnish the Underwriters with
such conformed copies of such opinions, certificates, letters and other
documents as the Underwriters shall reasonably request and the Company
shall furnish to the Underwriters such further certificates and
documents as the Underwriters shall have reasonably requested.
(m) Subsequent to the execution and delivery of this
Underwriting Agreement (i) no downgrading or adverse change shall have
occurred in the rating accorded any security of the Company by any
"nationally recognized statistical rating organization," as that term
is defined by the Commission for purposes of Rule 436(g)(2) of the 1933
Act Rules and Regulations and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any security of the
Company, that, in either event, makes it impractical or inadvisable, in
the Underwriters' judgment, to offer or deliver the Shares on the terms
and in the manner contemplated by the Prospectus.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold the
Underwriters harmless, their directors, officers, employees and agents
and each person, if any, who controls them within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, liabilities, expenses and damages
(including, but not limited to, any and all investigative, legal and
other expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding between
any of the indemnified parties and any indemnifying parties or between
any indemnified party and any third party, or otherwise, or any claim
asserted), as and when incurred to which the Underwriters, or any such
person, may become subject under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on (i) any untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or
any amendment or supplement to the Registration Statement or the
Prospectus or in any documents filed under the Exchange Act and deemed
to be incorporated by reference into the Prospectus, or in any
application or other document executed by or on behalf of the Company
or based on written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Shares under
the securities or blue sky laws thereof or filed with the Commission,
(ii) the omission or alleged omission to state in such document a
material fact required to be stated in it or necessary to make the
statements in it, in the light of the circumstances under which they
were made, not misleading or (iii) any act or failure to act or any
alleged act or failure to act by the Underwriters in connection with,
or relating in any manner to, the Shares or the offering contemplated
hereby, and which is included as part of or referred to in any loss,
claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company
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<PAGE>
shall not be liable under this clause (iii) to the extent it is finally
judicially determined by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by the
Underwriters through their gross negligence or willful misconduct);
provided that the Company will not be liable to the extent that such
loss, claim, liability, expense or damage arises from the sale of the
Shares in the public offering to any person and is based on an untrue
statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to the
Underwriters furnished in writing to the Company by the Underwriters
expressly for inclusion in the Registration Statement or the
Prospectus. The Underwriters confirm to the Company and the Company
acknowledges that only the following information appearing in the
Prospectus with respect to the public offering of the Shares has been
furnished to the Company by the Underwriters for use in the Prospectus:
(i) the names of the Underwriters contained on the cover page and back
cover page of the Prospectus Supplement; (ii) the stabilization legend
on the inside front cover page of the Prospectus Supplement; and (iii)
the information in the first, second and sixth paragraphs under the
caption "Underwriting" in the Prospectus Supplement. This indemnity
agreement will be in addition to any liability that the Company might
otherwise have.
(b) The Underwriters will indemnify and hold harmless
the Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act,
each director of the Company and each officer of the Company who signs
the Registration Statement to the same extent as the foregoing
indemnity from the Company to the Underwriters, but only insofar as
losses, claims, liabilities, expenses or damages arise out of or are
based on any untrue statement or omission or alleged untrue statement
or omission made in reliance on and in conformity with information
relating to the Underwriters furnished in writing to the Company by the
Underwriters expressly for use in the Registration Statement or the
Prospectus. This indemnity will be in addition to any liability that
the Underwriters might otherwise have; provided, however, that in no
case shall the Underwriters be liable or responsible for any amount in
excess of the underwriting discounts and commissions received by the
Underwriters.
(c) Any party that proposes to assert the right to be
indemnified under this Section 6 will, promptly after receipt of notice
of commencement of any action against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section 6, notify each such indemnifying party of the commencement of
such action, enclosing a copy of all papers served, but the omission so
to notify such indemnifying party will not relieve it from any
liability that it may have to any indemnified party under the foregoing
provisions of this Section 6 unless, and only to the extent that, such
omission results in the forfeiture of substantive rights or defenses by
the indemnifying party. If any such action is brought against any
indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in
and, to the extent that it elects by delivering written notice to the
indemnified party promptly after receiving notice of the commencement
of the action from the indemnified party, jointly with any other
indemnifying party similarly notified,
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<PAGE>
to assume the defense of the action, with counsel reasonably
satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided
below and except for the reasonable costs of investigation subsequently
incurred by the indemnified party in connection with the defense. The
indemnified party will have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless (i) the
employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has
reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying
party, (iii) a conflict or potential conflict exists (based on advice
of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the
indemnified party) or (iv) the indemnifying party has not in fact
employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and
other charges of counsel will be at the expense of the indemnifying
party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one additional firm
admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they
are incurred. An indemnifying party will not be liable for any
settlement of any action or claim effected without its written consent
(which consent will not be unreasonably withheld); provided, however,
no indemnifying party shall, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated by this Section 6 (whether or not
any indemnified party is a party thereto), unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising or that may arise out of
such claim, action or proceeding. Notwithstanding any other provision
of this Section 6(c), if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into
and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of
such settlement.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in the foregoing paragraphs of this Section 6 is applicable in
accordance with its terms but for any reason is held to be unavailable
from the Company or the Underwriters, the Company and the Underwriters
27
<PAGE>
will contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted,
but after deducting any contribution received by the Company from
persons other than the Underwriters, such as persons who control the
Company within the meaning of the Act, officers of the Company who
signed the Registration Statement and directors of the Company, who
also may be liable for contribution) to which the Company and the
Underwriters may be subject in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page
of the Prospectus Supplement. If, but only if, the allocation provided
by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in
the foregoing sentence but also the relative fault of the Company on
the one hand, and the Underwriters, on the other, with respect to the
statements or omissions which resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by
the Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant
to this Section 6(d) were to be determined by pro rata allocation or by
any other method of allocation which does not take into account the
equitable considerations referred to herein. The amount paid or payable
by an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect thereof, referred to above in
this Section 6(d) shall be deemed to include, for purpose of this
Section 6(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section
6(d), the Underwriters shall not be required to contribute any amount
in excess of the underwriting discounts and commissions received by the
Underwriters and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6(d), any person who
controls a party to this Underwriting Agreement within the meaning of
the Act will have the same rights to contribution as that party, and
each officer of the Company who signed the Registration Statement will
have the same rights to contribution as the Company, subject in each
case to the provisions hereof. Any party entitled to contribution,
promptly after receipt of notice of commencement of any action against
such party in respect of which a claim for contribution may be made
under this Section 6(d), will notify any such party or parties from
whom contribution may be sought, but the omission so to notify will not
relieve the party or parties from whom contribution may be sought from
any other
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<PAGE>
obligation it or they may have under this Section 6(d). Except for a
settlement entered into pursuant to the last sentence of Section 6(c)
hereof, no party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will
not be unreasonably withheld).
(e) The indemnity and contribution agreements
contained in this Section 6 and the representations and warranties of
the Company contained in this Underwriting Agreement shall remain
operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Underwriters, (ii) acceptance
of the Shares and payment therefor or (iii) any termination of this
Underwriting Agreement.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company contained herein or in
certificates delivered pursuant hereto, and the Underwriters' agreements
contained in Section 6 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Underwriters
or any controlling persons, or the Company or any of its officers, directors or
any controlling persons, and shall survive delivery of and payment for the
Shares hereunder.
8. TERMINATION. The Underwriters shall have the right by
giving notice as hereinafter specified at any time at or prior to the Closing
Date, to terminate this Underwriting Agreement if (i) the Company shall have
failed, refused or been unable, at or prior to the Closing Date, to perform any
agreement on its part to be performed hereunder, (ii) any condition of the
Underwriters' obligations specified in Section 5 hereof is not fulfilled when
due, (iii) trading on the NYSE shall have been wholly suspended, (iv) minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices
for the Common Stock shall have been required, on the NYSE by the NYSE or by
order of the Commission or any other governmental authority having jurisdiction,
(v) a banking moratorium shall have been declared by federal or New York
authorities, or (vi) an outbreak of major hostilities in which the United States
is involved, a declaration of war by Congress, any other substantial national or
international calamity or any other event or occurrence of a similar character
shall have occurred since the execution of this Underwriting Agreement that, in
the Underwriters' judgment, makes it impractical or inadvisable to proceed with
the completion of the sale of and payment for the Shares. Any such termination
shall be without liability of any party to any other party with respect to
Shares not purchased by reason of such termination except that the provisions of
Section 4(g), Section 4(h) and Section 6 hereof shall at all times be effective.
If the Underwriters elect to terminate this Underwriting Agreement as provided
in this Section, the Company shall be notified promptly by the Underwriters by
telephone, telex or telecopy, confirmed by letter.
9. NOTICES. All notices or communications hereunder shall be
in writing and if sent to the Underwriters shall be mailed, delivered, telexed
or telecopied and confirmed to the Underwriters in care of PaineWebber
Incorporated at 1285 Avenue of the Americas, New York, New York 10019, c/o Real
Estate Investment Banking, attention: David R. Jarvis (with copy, which shall
not constitute notice, to Jay L. Bernstein, Esq., c/o Rogers & Wells, 200 Park
Avenue, New York, New York 10166), or if sent to the Company, shall be mailed,
delivered, telexed or telecopied and confirmed to Robert J. Stetson c/o the
Company at 5310 Harvest Hill Road, Suite 270, Dallas, Texas 75230 (with copy,
which shall not constitute notice, to Kenneth
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<PAGE>
L. Betts, Esq., c/o Winstead Sechrest & Minick P.C., 5400 Renaissance Tower,
1201 Elm Street, Dallas, Texas 75270). Any party to this Underwriting Agreement
may change such address for notices by sending to the other party to this
Underwriting Agreement written notice of a new address for such purpose.
10. PARTIES. This Underwriting Agreement shall inure to the
benefit of, and be binding upon, the Company and the Underwriters and their
respective successors and the controlling persons, officers, directors,
employees and representatives referred to in Section 6 hereof, and no other
person will have any right or obligation hereunder.
11. APPLICABLE LAW. This Underwriting Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
12. OVER-ALLOTMENT OPTION.
(a) Upon written notice from the Underwriters given
to the Company not more than 30 days subsequent to the date of the
public offering of the Shares, the Underwriters may purchase all or
less than all of the Option Shares at the Purchase Price per share to
be paid for the Firm Shares. Such Option Shares may be purchased by the
Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Shares. No Option Shares shall be
sold or delivered unless the Firm Shares previously have been, or
simultaneously are, sold and delivered. The right to purchase the
Option Shares or any portion thereof may be surrendered and terminated
at any time upon notice by the Underwriters to the Company. The
"Closing Date" as defined in Section 3 hereof shall be deemed to be the
"Closing Date," and the time for the delivery of, and payment for, the
Option Shares is herein referred to as the "Option Closing Date" (which
may be the Closing Date). The Option Closing Date shall be determined
by the Underwriters but shall be not later than 10 days after the
Underwriters give to the Company written notice of election to purchase
Option Shares. The preparation, registration, checking and delivery of,
and payment for, the Option Shares shall occur or be made in the same
manner as provided in Section 3 hereof for the Firm Shares, except as
the Underwriters and the Company may otherwise agree.
(b) The conditions to the Underwriters' obligations
set forth in Section 5 shall be deemed to be conditions to the
Underwriters' obligation to purchase and pay for the Shares to be
purchased on each of the Closing Date and the Option Closing Date, as
the case may be; references in that Section and in Sections 2, 8 and 13
hereof to the "Closing Date" shall be deemed to be references to the
Closing Date or the Option Closing Date, as the case may be, and
references to the "Shares" in Section 5 hereof shall be deemed to be
references to the Shares to be purchased at such Closing Date. A
termination of this Underwriting Agreement as to the Option Shares
after the Closing Date will not terminate this Underwriting Agreement
as to the Firm Shares.
13. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If, on either
the Closing Date or the Option Closing Date, any Underwriter defaults in the
performance of its obligations under this Underwriting Agreement, the remaining
non-defaulting Underwriters shall be obligated to
30
<PAGE>
purchase the Shares which the defaulting Underwriter agreed but failed to
purchase on such Closing Date in the respective proportions which the number of
Firm Shares set forth opposite the name of each remaining non-defaulting
Underwriter in SCHEDULE A hereto bears to the total number of Firm Shares set
forth opposite the names of all the remaining non-defaulting Underwriters in
SCHEDULE A hereto; provided, however, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Shares on such
Closing Date if the total number of Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total number of Shares to be purchased on such Closing Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of Shares which it agreed to purchase on such Closing Date. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Underwriters who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Shares to be purchased on such Closing
Date. If the remaining non-defaulting Underwriters or other underwriters
satisfactory to the Underwriters do not elect to purchase the Shares which the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Closing Date, this Underwriting Agreement (or, with respect to the Option
Closing Date, the obligation of the Underwriters to purchase, and of the Company
to sell, the Option Securities) shall terminate without liability on the part of
any non-defaulting Underwriter or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Sections 4(g) and 4(h). As used in this Underwriting Agreement, the term
"Underwriter" includes, for all purposes of this Underwriting Agreement unless
the context requires otherwise, any party not listed in SCHEDULE A hereto who,
pursuant to this Section 13, purchases Firm Shares which a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company for damages caused by
its default. If other underwriters are obligated or agree to purchase the Shares
of a defaulting or withdrawing Underwriter, either the Underwriters or the
Company may postpone the Closing Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
31
<PAGE>
If the foregoing correctly sets forth the understanding
between the Company and the Underwriters, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement between the Company and the Underwriters.
Very truly yours,
U.S. RESTAURANT PROPERTIES, INC.
By: /s/ Robert J. Stetson
---------------------------
Name: Robert J. Stetson
Title: Chief Executive Officer
and President
U.S. RESTAURANT PROPERTIES
OPERATING L.P.
By: /s/ Robert J. Stetson
---------------------------
USRP Managing, Inc.,
its general partner
Name: Robert J. Stetson
Title: Chief Executive Officer
and President
ACCEPTED as of the date first above
written
PAINEWEBBER INCORPORATED
By: /s/ Malcoln F. MacLean IV
-------------------------------
Name: Malcolm F. MacLean IV
Title: Vice President
For itself and as representative
of the several Underwriters named
in SCHEDULE A hereto
32
<PAGE>
SCHEDULE A
----------
UNDERWRITERS
------------
UNDERWRITER NUMBER OF SHARES
- ----------- ----------------
PaineWebber Incorporated................................. 1,500,000
Morgan Keegan & Company, Inc............................. 750,000
EVEREN Securities, Inc................................... 450,000
Crowell, Weedon & Co..................................... 300,000
Piper Jaffray Inc. ...................................... 100,000
Southwest Securities, Inc. .............................. 100,000
===========
Total........................................... 3,200,000
Sch. A
<PAGE>
SCHEDULE B
----------
SUBSIDIARIES
------------
1. U.S. Restaurant Properties Operating L.P. (Delaware)
2. U.S. Restaurant Properties Master L.P. (Delaware)
3. U.S. Restaurant Properties Business Trust I (Delaware)
4. U.S. Restaurant Properties Business Trust II (Delaware)
5. USRP (West Virginia) Partners, L.P. (Texas)
6. Restaurant Renovation Partners, L.P.(Texas)
7. USRP (Lincoln), Ltd. (Texas)
8. USRP (Norman), Ltd. (Texas)
9. USRP (Carolina), Ltd. (Texas)
10. Restaurant Acquisition Corp. (Texas)
11. USRP Renovation Corp. (Texas)
12. Restaurant Contractor Corp. (Texas)
13. USRP (DeeDee), LLC (Texas)
14. USRP (Sybra), LLC (Texas)
15. USRP (Ribbit), LLC (Texas)
16. USRP (Jones), LLC (Texas)
17. USRP (Central Avenue), LLC (Texas)
18. USRP (Midon), LLC (Texas)
19. USRP Managing, Inc. (Delaware)
Sch. B
<PAGE>
SCHEDULE C
----------
PROPERTIES IN WHICH THE COMPANY HOLDS A LEASEHOLD INTEREST
----------------------------------------------------------
1. BK 9313 Mira Mesa Blvd. San Diego, CA
2. BK 23924 U.S. Highway N. Clearwater, FL
3. BK 575 Connecticut Avenue Norwalk, CT
4. Jose's Mexican 950 South "E" Street San Bernardino, CA
5. BK 2808 N. Tamiami Trail Sarsota, FL
6. BK 2777 W. 11th Avenue Eugene, OR
7. BK 882 State Route 28 Milford, OH
8. BK 614 North Montana Avenue Helena, MT
9. BK 137 Main Street Kingston, MA
10. BK 23221 Pacific Highway South Kent, WA
11. BK 1603 East Main Alice, TX
12. BK 520 New Road Sommers Point, NJ
13. BK 785 North Main Street Bishop, CA
14. BK 3000 South Island Avenue Philadelphia, PA
15. BK 503 N. Third Street (Oxford Mall) Oxford, PA
16. BK 248 Canal Street Brattleboro, VT
17. BK 1090 South Big "A" Road Tuccoa, GA
18. BK 3410 William Penn Highway Wilkins Township, PA
19. BK 223 South Lincoln Steet Spokane, WA
20. BK 1543 Floyd Baker Blvd. Gaffney, SC
21. BK 310 Baltimore Pike Belaire, MD
22. BK 5400 Ygnacio Valley Road Concord, CA
23. BK Crossroads Shopping Center Westminster, MD
24. BK 1715 Northwest Avenue El Dorado, AR
25. BK 3520 East Santa Fe Avenue Flagstaff, AZ
26. BK 1690 Beaver Road Baden, PA
27. BK 6404 Ringgold Road Chattanooga, TN
28. BK 130 Main Street Middletown, CT
29. BK 2531 N. Broad Street Camden, SC
30. BK 2113 South First Street Yakima, WA
31. BK 1020 E. First Street Ankemy, IA
32. BK E. 11519 Sprague Avenue Spokane, WA
33. BK Rt. 206 & Rt. 1-30 N. Bordentown, NJ
34. BK 1481 Blackwood-Clementon Road Clementon, NJ
35. BK 3 Springs Drive Weirton, WV
36. BK Rt. 1A & E. Maple Street Ellsworth, ME
37. BK 7278 Point Douglas Road Cottage Grove, MN
38. BK 100 W. County Line Road Columbiana, OH
39. BK 403 E. Broadway Street Little Rock, AR
40. BK Argonne & Knox Spokane, WA
41. BK 15 South 8th Street Philadelphia, PA
42. BK 130 S. Wyoming Avenue Kingston, PA
Sch. C
<PAGE>
43. BK 1500 - 86th Street Clive, IA
44. BK 1124 West George Street LaCrosse, WI
45. BK 6909 Odana Road Madisco, WI
46. BK 2710 Grand Avenue Phoenix, AZ
47. BK 2530 N. Central Avenue Phoenix, AZ
48. BK R.D. 4 - Route 30 Bedford, PA
49. BK 900 Bridge Street Cillicothe, OH
50. BK 1616 Beaver Creek Road Oregon City, OR
51. BK 1641 Frederica Street Owensboro, KY
52. BK 4637 Sunset Blvd., N.E. Renton, WA
53. BK 2817 South El Camino Real San Mateo, CA
54. BK 170 West El Monte Way Dinuba, CA
55. BK 10 North Wilmot Road Tucson, AZ(a)
56. BK 1278 Mt. Vernon Avenue Marion, OH
57. BK Lancaster Pike & Plank Road Paoli, PA
58. BK Route 52 Airport Square Bluefield, WV
59. BK II 805 S. College Road Wilmington, NC
60. BK II 7736 State Avenue Kansas City, KS
61. BK II 3100 Dixie Highway Erlanger, KY
62. BK II 2734 N. Tustin Avenue Orange, CA
63. BK II Hwy. 67 & Edmoore Ct. Statesboro, GA
64. BK II 2950 W. Parker Road Plano, TX
65. BK II 340 Hartford Turnpike Vernon, CT
66. BK II 1763 E. Prince Road Tucson, AZ
67. BK II 1219 Parker Street Springfield, MA
68. BK II 5850 W. Camelback Road Glendale, AZ
69. BK 54 N. Groesbeck Highway Mt. Clemens, MI
70. BK 1860 Central Avenue Albany, NY
71. BK 1114 E. Main Street Magnolia, AR
72. BK 4709 State Highway 55 Durham, NC
73. BK 560 Spring Mill Road Mansfield, OH
74. BK 290 Main Street Binghampton, NY
75. BK 4035 Route 31 Clay, NY
76. Hardee's 3003 Boundary St., US Hwy. 21 Beaufort, SC
77. Hardee's 4992 Altanta Avenue Brunswick, GA
78. Hardee's 309 Highway 80 Garden City, GA
79. Hardee's P.O. Box 2094, Hwy. 144 & 17 Richmond Hill, GA
80. Hardee's 524 Memorial Drive Waycross, GA
81. Fazoli's 315 College Mall Drive Bloomington, IN
82. Memphis Best 8071 Manchester Road Brentwood, MO
83. Pizza Hut 5101 West 98th Street Bloomington, IN
84. Pizza Hut 3737 Hempstead Turnpike Levittown, NY
85. Tippen's Restaurant 2931 South Noland Road Independence, MO
Sch. C
<PAGE>
SCHEDULE D
----------
TENANT RIGHTS OF FIRST REFUSAL/FIRST OFFER
------------------------------------------
1. Memphis Best 8071 Manchester Road Brentwood, MO
2. Tippin's Restaurant 2931 South Noland Road Independence, MO
Sch. D
<PAGE>
SCHEDULE E
----------
PROPERTIES WHICH ARE NOT TRIPLE NET LEASED
------------------------------------------
1. BK 301 Poyntz Avenue Manhattan, KS
2. BK-closed 16901 E. Highway 24 Independence, MO
3. Puerta Vallarta 745 East Foothill Blvd. Rialto, CA
4. Chili's 2406 I-35 E. South Denton, TX
5. Pilot Point Bank 2410 I-35 E. South Denton, TX
6. Red Pepper Chinese 2412 I-35 E. South Denton, TX
7. Tumbleweeds 320 Patchogue-Port Jefferson Rd. Port Jefferson, NY
Sch. E
Series A Cumulative Convertible Preferred Stock
(Liquidation Preference $25.00 Per Share)
ARTICLES SUPPLEMENTARY
U.S. RESTAURANT PROPERTIES, INC.
---------------------------
Articles Supplementary Classifying and Designating a
Series of Preferred Stock as
Series A Cumulative Convertible Preferred Stock
and Fixing Distribution and
Other Preferences and Rights of Such Series
---------------------------
Dated as of November 11, 1997
<PAGE>
U.S. RESTAURANT PROPERTIES, INC.
-----------
Articles Supplementary Classifying and Designating a
Series of Preferred Stock as
Series A Cumulative Convertible Preferred Stock
and Fixing Distribution and
Other Preferences and Rights of Such Series
-----------
U.S. Restaurant Properties, Inc., a Maryland corporation, having its
principal office in the State of Maryland in the City of Baltimore (the
"CORPORATION"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
Pursuant to authority expressly vested in the Board of Directors by
Article IV of the Articles of Incorporation, as amended (the "ARTICLES OF
INCORPORATION"), the Board of Directors adopted resolutions authorizing the
creation and issuance of up to Three Million Six Hundred Eighty Thousand
(3,680,000) shares, with a liquidation preference of Twenty-Five Dollars
($25.00) per share, of Series A Cumulative Convertible Preferred Stock and
adopted resolutions granting the Executive Committee of the Board of Directors
with full power and authority, subject to the foregoing resolution, to determine
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the shares of such series. Such preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption, number of shares and
dividend rate, as determined by such duly authorized committee are as follows:
Section 1. NUMBER OF SHARES AND DESIGNATION. This series of Preferred
Stock shall be designated as Series A Cumulative Convertible Preferred Stock
(the "SERIES A PREFERRED STOCK") and the number of shares which shall constitute
such series shall be 3,680,000 shares, par value $0.001 per share, which number
may be decreased (but not below the number thereof then outstanding) from time
to time by the Board of Directors.
Section 2. DEFINITIONS. For purposes of the Series A Preferred Stock,
the following terms shall have the meanings indicated:
"ACT" shall mean the Securities Act of 1933, as amended.
"AFFILIATE" of a person means a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the person specified.
<PAGE>
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Series A
Preferred Stock.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"CALL DATE" shall have the meaning set forth in paragraph (b) of
Section 5 hereof.
"COMMON STOCK" shall mean the common stock, $0.001 par value per share,
of the Corporation or such shares of the Corporation's capital stock
into which such Common Stock shall be reclassified.
"CONSTITUENT PERSON" shall have the meaning set forth in paragraph (e)
of Section 7 hereof.
"CONVERSION PRICE" shall mean the conversion price per share of Common
Stock for which each share of Series A Preferred Stock is convertible,
as such Conversion Price may be adjusted pursuant to paragraph (d) of
Section 7. The initial conversion price shall be $26.64 (equivalent to
a conversion rate of .9384 shares of Common Stock for each share of
Series A Preferred Stock).
"CURRENT MARKET PRICE" of publicly traded shares of Common Stock or any
other class or series of capital stock or other security of the
Corporation or of any similar security of any other issuer for any day
shall mean the last reported sales price, regular way on such day, or,
if no sale takes place on such day, the average of the reported closing
bid and asked prices regular way on such day, in either case as
reported on the New York Stock Exchange ("NYSE") or, if such security
is not listed or admitted for trading on the NYSE, on the principal
national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any
national securities exchange, on the National Market of the National
Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or, if such security is not quoted on such National Market,
the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by NASDAQ, or, if bid and asked
prices for such security on such day shall not have been reported
through NASDAQ, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such
security selected for such purpose by the Chief Executive Officer or
the Board of Directors or if any class or series of securities are not
publicly traded, the fair value of the shares of such class as
determined reasonably and in good faith by the Board of Directors of
the Corporation.
"DISTRIBUTION" shall have the meaning set forth in paragraph (d)(iii)
of Section 7 hereof.
-2-
<PAGE>
"DIVIDEND PAYMENT DATE" shall mean, with respect to each Dividend
Period, the fifteenth day of March, June, September and December, in
each year, commencing on March 15, 1998; provided, however, that if any
Dividend Payment Date falls on any day other than a Business Day, the
dividend payment due on such Dividend Payment Date shall be paid on the
Business Day immediately following such Dividend Payment Date.
"DIVIDEND PERIODS" shall mean quarterly dividend periods commencing on
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding
Dividend Period (other than the initial Dividend Period, which shall
commence on the Issue Date and end on and include December 31, 1997).
"FAIR MARKET VALUE" shall mean the average of the daily Current Market
Prices of a share of Common Stock during five (5) consecutive Trading
Days selected by the Corporation commencing not more than twenty (20)
Trading Days before, and ending not later than, the earlier of the day
in question and the day before the "ex" date with respect to the
issuance or distribution requiring such computation. The term "'ex
date," when used with respect to any issuance or distribution, means
the first day on which the share of Common Stock trades regular way,
without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that
day's Current Market Price.
"FUNDS AVAILABLE FOR DISTRIBUTION" shall mean funds from operations
(net income, computed in accordance with generally accepted accounting
principles excluding gains or losses from debt restructuring and sales
of property, plus depreciation and amortization) minus non-revenue
generated capital expenditures and debt principal amortization, as
determined by the Board of Directors on a basis consistent with the
policies and practices adopted by the Corporation for reporting
publicly its results of operations and financial condition.
"ISSUE DATE" shall mean November 17, 1997.
"JUNIOR STOCK" shall mean the Common Stock and any other class or
series of capital stock of the Corporation over which the shares of
Series A Preferred Stock have preference or priority in the payment of
dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"NON-ELECTING SHARE" shall have the meaning set forth in paragraph (e)
of Section 7 hereof.
"PARITY STOCK" shall have the meaning set forth in paragraph (b) of
Section 8 hereof.
"PERMITTED COMMON STOCK CASH DISTRIBUTIONS" means cash dividends and
cash distributions paid on Common Stock after December 31, 1996 not in
excess of the sum
-3-
<PAGE>
of the Corporation's cumulative undistributed net earnings at December
31, 1996, plus the cumulative amount of Funds Available for
Distribution after December 31, 1996, minus the cumulative amount of
dividends accumulated, accrued or paid on the Series A Preferred Stock
or any other class of Preferred Stock after January 1, 1997.
"PERSON" shall mean any individual, firm partnership, corporation or
other entity and shall include any successor (by merger or otherwise)
of such entity.
"PRESS RELEASE" shall have the meaning set forth in paragraph (a)(i) of
Section 5 hereof.
"SERIES A PREFERRED STOCK" shall have the meaning set forth in Section
1 hereof.
"SET APART FOR PAYMENT" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Series A
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"TRADING DAY", as to any securities, shall mean any day on which such
securities are traded on the NYSE or, if such securities are not listed
or admitted for trading on the NYSE, on the principal national
securities exchange on which such securities are listed or admitted or,
if such securities are not listed or admitted for trading on any
national securities exchange, on the National Market of NASDAQ or, if
such securities are not quoted on such National Market, in the
securities market in which such securities are traded.
"TRANSACTION" shall have the meaning set forth in paragraph (e) of
Section 7 hereof.
"TRANSFER AGENT" means American Stock Transfer and Trust or such other
U.S. bank with aggregate capital, surplus and undivided profits, as
shown on its last published report, of at least $50,000,000 as may be
designated by the Board of Directors or their designee as the transfer
agent for the Series A Preferred Stock.
"VOTING PREFERRED STOCK" shall have the meaning set forth in Section 9
hereof.
-4-
<PAGE>
Section 3. DIVIDENDS.
(a) The holders of Series A Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Series A Preferred Stock equal to the greater of (i) $.4825 per
quarter (equivalent to $1.93 per annum) or (ii) the cash dividends paid or
payable on the number of shares of Common Stock, or portion thereof, into which
a share of Series A Preferred Stock is convertible, in each case with
appropriate proration for partial quarters. The amount referred in clause (ii)
of this paragraph (a) with respect to each Dividend Period shall be determined
as of the applicable Dividend Payment Date by multiplying the number of shares
of Common Stock, or portion thereof calculated to the fourth decimal point, into
which a share of Series A Preferred Stock would be convertible at the opening of
business on such Dividend Payment Date (based on the Conversion Price then in
effect) by the quarterly cash dividend payable or paid for such Dividend Period
in respect of a share of Common Stock outstanding as of the record date for the
payment of dividends on the Common Stock with respect to such Dividend Period
or, if different, with respect to the most recent quarterly period for which
dividends with respect to the Common Stock have been declared. Such dividends
shall be cumulative from the Issue Date, whether or not in any Dividend Period
or Periods such dividends shall be declared or there shall be funds of the
Corporation legally available for the payment of such dividends, and shall be
payable quarterly in arrears on the Dividend Payment Dates, commencing on the
first Dividend Payment Date after the Issue Date. Each such dividend shall be
payable in arrears to the holders of record of the Series A Preferred Stock, as
they appear on the stock records of the Corporation at the close of business on
a record date which shall be not more than sixty (60) days prior to the
applicable Dividend Payment Date and shall be fixed by the Board of Directors to
coincide with the record date for the regular quarterly dividends, if any,
payable with respect to the Common Stock. Accumulated, accrued and unpaid
dividends for any past Dividend Periods may be declared and paid at any time,
without reference to any regular Dividend Payment Date, to holders of record on
such date, which date shall not precede by more than forty-five (45) days the
payment date thereof, as may be fixed by the Board of Directors. The amount of
accumulated, accrued and unpaid dividends on any share of Series A Preferred
Stock, or fraction thereof, at any date shall be the amount of any dividends
thereon calculated at the applicable rate to and including such date, whether or
not earned or declared, which have not been paid in cash.
(b) The amount of dividends payable per share of Series A
Preferred Stock for each Dividend Period shall be computed by dividing the
annual dividend by four (4). The amount of dividends payable per share of Series
A Preferred Stock for the initial Dividend Period, or any other period shorter
or longer than a full Dividend Period, shall be computed ratably on the basis of
twelve (12) 30-day months and a 360-day year. Holders of Series A Preferred
Stock shall not be entitled to any dividends, whether payable in cash, property
or stock, in excess of cumulative dividends, as herein provided, on the Series A
Preferred Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series A Preferred
Stock that may be in arrears.
-5-
<PAGE>
(c) So long as any of the shares of Series A Preferred Stock
are outstanding, no dividends, except as described in the immediately following
sentence, shall be declared or paid or set apart for payment by the Corporation
or other distribution of cash or other property declared or made directly or
indirectly by the Corporation or any affiliate or any person acting on behalf of
the Corporation or any of its affiliates with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof have
been or contemporaneously are set apart for such payment on the Series A
Preferred Stock for all Dividend Periods terminating on or prior to the Dividend
Payment Date with respect to such class or series of Parity Stock. When
dividends are not paid in full or a sum sufficient for such payment is not set
apart, as aforesaid, all dividends declared upon the Series A Preferred Stock
and all dividends declared upon any other class or series of Parity Stock shall
be declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Series A Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Series A Preferred Stock
are outstanding, no dividends (other than dividends or distributions paid in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Junior Stock) shall be declared or paid or set apart for payment by the
Corporation or other distribution of cash or other property declared or made
directly or indirectly by the Corporation or any affiliate or any person acting
on behalf of the Corporation or any of its affiliates with respect to any shares
of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or
otherwise acquired (other than a redemption, purchase or other acquisition of
Common Stock made for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking-fund for the redemption of any shares of any
such stock) directly or indirectly by the Corporation or any affiliate or any
person acting on behalf of the Corporation or any of its affiliates (except by
conversion into or exchange for Junior Stock), nor shall any other cash or other
property otherwise be paid or distributed to or for the benefit of any holder of
shares of Junior Stock in respect thereof, directly or indirectly, by the
Corporation or any affiliate or any person acting on behalf of the Corporation
or any of its affiliates unless in each case (i) the full cumulative dividends
(including all accumulated, accrued and unpaid dividends) on all outstanding
shares of Series A Preferred Stock and any other Parity Stock of the Corporation
shall have been paid or such dividends have been declared and set apart for
payment for all past Dividend Periods with respect to the Series A Preferred
Stock and all past dividend periods with respect to such Parity Stock and (ii)
sufficient funds shall have been paid or set apart for the payment of the full
dividend for the current Dividend Period with respect to the Series A Preferred
Stock and the current Dividend Period with respect to such Parity Stock.
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of
-6-
<PAGE>
Junior Stock, the holders of shares of Series A Preferred Stock shall be
entitled to receive Twenty-Five Dollars ($25.00) per share of Series A Preferred
Stock plus an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Series A Preferred Stock have been paid the liquidation
preference in full, no payment will be made to any holder of Junior Stock upon
the liquidation, dissolution or winding up of the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Series A
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series of
Parity Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of Series A Preferred Stock and any such other Parity Stock
ratably in the same proportion as the respective amounts that would be payable
on such Series A Preferred Stock and any such other Parity Stock if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation's assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of any shares of
Parity Stock, upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Series
A Preferred Stock and any Parity Stock, as provided in this Section 4, any other
series or class or classes of Junior Stock shall, subject to the respective
terms thereof, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Series A Preferred Stock and any Parity
Stock shall not be entitled to share therein.
Section 5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Series A Preferred Stock shall not be redeemable
by the Corporation prior to November 15, 2002. On and after November 15, 2002,
the Corporation, at its option, may redeem shares of Series A Preferred Stock,
in whole or from time to time in part, as set forth herein, subject to the
provisions described below:
(i) Shares of Series A Preferred Stock may be
redeemed, in whole, or in part, at the option of the Corporation, at
any time on or after November 15, 2002 by issuing and delivering to
each holder for each share of Series A Preferred Stock to be redeemed
such number of authorized but previously unissued shares of Common
Stock as equals the liquidation preference (excluding any accumulated,
accrued and unpaid dividends, if any, to the Call Date (as defined in
paragraph (b) below), which are to be paid in cash, whether or not
earned or declared, as provided below) per share of Series A Preferred
Stock divided by the Conversion Price as in effect as of the opening of
business on the Call Date; PROVIDED, HOWEVER, that the Corporation may
redeem shares of Series A preferred Stock pursuant to this paragraph
(a)(i) only if for twenty (20) Trading Days,
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within any period of thirty (30) consecutive Trading Days, including
the last Trading Day of such 30-Trading Day period, the Current Market
Price of the Common Stock on each of such twenty (20) Trading Days
equals or exceeds the Conversion Price in effect on such Trading Days.
In order to exercise its redemption option pursuant to this paragraph
(a)(i), the Corporation must issue a press release announcing the
redemption (the "PRESS RELEASE") prior to the opening of business on
the second Trading Day after the condition in the preceding sentence
has, from time to time, been satisfied. The Corporation may not issue a
Press Release prior to October 16, 2002. The Press Release shall
announce the redemption and set forth the number of shares of Series A
Preferred Stock that the Corporation intends to redeem; or
(ii) Shares of Series A Preferred Stock may be
redeemed, in whole or in part, at the option of the Corporation at any
time on or after November 15, 2002 out of funds legally available
therefor at a redemption price payable in cash equal to Twenty-Five
Dollars ($25.00) per share of Series A Preferred Stock (plus an amount
equal to all accumulated, accrued and unpaid dividends, if any, to the
Call Date, whether or not earned or declared, as provided below).
(b) Shares of Series A Preferred Stock shall be redeemed by
the Corporation on the date specified in the notice to holders required under
paragraph (d) of this Section 5 (the "CALL DATE"). The Call Date shall be
selected by the Corporation, shall be specified in the notice of redemption and
shall be not less than thirty (30) days nor more than sixty (60) days after (i)
the date on which the Corporation issues the Press Release, if such redemption
is pursuant to paragraph (a)(i) of this Section 5, and (ii) the date notice of
redemption is sent by the Corporation, if such redemption is pursuant to
paragraph (a)(ii) of this Section 5. Upon any redemption of shares of Series A
Preferred Stock pursuant to paragraphs (a)(i) or (a)(ii) of this Section 5, the
Corporation shall pay in cash to the holder of such shares an amount equal to
all accumulated, accrued and unpaid dividends, if any, to the Call Date, whether
or not earned or declared. Immediately prior to authorizing any redemption of
the Series A Preferred Stock, and as a condition precedent for such redemption,
the Company, by resolution of its Board of Directors, shall declare a mandatory
dividend on the Series A Preferred Stock payable in cash on the Call Date in an
amount equal to all accumulated, accrued and unpaid dividends as of the Call
Date on the Series A Preferred Stock to be redeemed, which amount shall be added
to the redemption price. If the Call Date falls after a dividend payment record
date and prior to the corresponding Dividend Payment Date, then each holder of
Series A Preferred Stock at the close of business on such dividend payment
record date shall be entitled to the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the redemption of such
shares prior to such Dividend Payment Date. Except as provided above, the
Corporation shall make no payment or allowance for accumulated or accrued
dividends on shares of Series A Preferred Stock called for redemption or on the
shares of Common Stock issued upon such redemption.
(c) If full cumulative dividends on all outstanding shares of
Series A Preferred Stock and any other class or series of Parity Stock of the
Corporation have not been paid or
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declared and set apart for payment, no shares of Series A Preferred Stock may be
redeemed unless all outstanding shares of Series A Preferred Stock are
simultaneously redeemed and neither the Corporation nor any affiliate of the
Corporation may purchase or acquire shares of Series A Preferred Stock,
otherwise than pursuant to a purchase or exchange offer made on the same terms
to all holders of shares of Series A Preferred Stock.
(d) If the corporation shall redeem shares of Series A
Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such
redemption shall be given to each holder of record of the shares to be redeemed
and, if such redemption is pursuant to paragraph (a)(i) of this Section 5, such
notice shall be given not more than four (4) Business Days after the date on
which the Corporation issues the Press Release. Such notice shall be provided by
first class mail, postage prepaid, at such holder's address as the same appears
on the stock records of the Corporation, or by publication in THE WALL STREET
JOURNAL or THE NEW YORK TIMES, or if neither such newspaper is then being
published, any other daily newspaper of national circulation not less than
thirty (30) nor more than sixty (60) days prior to the Call Date. If the
Corporation elects to provide such notices by publication, it shall also
promptly mail notice of such redemption to the holders of the shares of Series A
Preferred Stock to be redeemed. Neither the failure to mail any notice required
by this paragraph (d), nor any defect therein or in the mailing thereof, to any
particular holder, shall affect the sufficiency of the notice or the validity of
the proceedings for redemption with respect to the other holders. Any notice
which was failed in the manner herein provided shall be conclusively presumed to
have been duly given on the date mailed whether or not the holder receives the
notice. Each such mailed or published notice shall state, as appropriate: (1)
the Call Date; (2) the number of shares of Series A Preferred Stock to be
redeemed and, if fewer than all such shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (3) whether
redemption will be for shares of Common stock pursuant to paragraph (a)(i) of
this Section 5 or for cash pursuant to paragraph (a)(ii) of this Section 5, and,
if redemption will be for Common Stock, the number of shares of Common Stock (or
fraction of a share of Common Stock) to be issued with respect to each share of
Series A Preferred Stock to be redeemed; (4) the place or places at which
certificates for such shares are to be surrendered for certificates representing
shares of Common Stock; (5) the then-current Conversion Price; and (6) that
dividends on the shares of Series A Preferred Stock to be redeemed shall cease
to accrue on such Call Date except as otherwise provided herein. Notice having
been published or mailed as aforesaid, from and after the Call Date (unless the
Corporation shall fail to issue and make available at the office of the Transfer
Agent the number of shares of Common Stock and/or amount of cash necessary to
effect such redemption, including all accumulated, accrued and unpaid dividends
to the Call Date, whether or not earned or declared), (i) except as otherwise
provided herein, dividends on the shares of Series A Preferred Stock so called
for redemption shall cease to accumulate or accrue on the shares of Series A
Preferred Stock called for redemption (except that, in the case of a Call Date
after a dividend record date and prior to the related Dividend Payment Date,
holders of Series A Preferred Stock on the dividend record date will be entitled
on such Dividend Payment Date to receive the dividend payable on such shares),
(ii) said shares shall no longer be deemed to be outstanding, and (iii) all
rights of the holders thereof as holders of Series A Preferred Stock of the
Corporation shall cease (except the rights to receive the shares of Common Stock
and/or cash
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payable upon such redemption, without interest thereon, upon surrender and
endorsement of their certificates if so required and to receive any dividends
payable thereon). The Corporation's obligation to provide shares of Common Stock
and/or cash in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the Call Date, the Corporation shall deposit with a bank or
trust company (which may be an affiliate of the Corporation) that has an office
in the Borough of Manhattan, The City of New York, or in Dallas, Texas, and that
has, or is an affiliate of a bank or trust company that has, a capital and
surplus of at least $50,000,000, such number of shares of Common Stock and such
amount of cash as is necessary for such redemption, in trust, with irrevocable
instructions that such shares of Common Stock and/or cash be applied to the
redemption of the shares of Series A Preferred Stock so called for redemption.
In the case of any redemption pursuant to paragraph (a)(i) of this Section 5, at
the close of business on the Call Date, each holder of shares of Series A
Preferred Stock to be redeemed (unless the Corporation defaults in the delivery
of the shares of Common Stock or cash payable on such Call Date) shall be deemed
to be the record holder of the number of shares of Common Stock into which such
shares of Series A Preferred Stock are to be converted at redemption, regardless
of whether such holder has surrendered the certificates representing the shares
of Series A Preferred Stock to be so redeemed. No interest shall accrue for the
benefit of the holders of shares of Series A Preferred Stock to be redeemed on
any cash so set aside by the Corporation. Subject to applicable escheat laws,
any such cash unclaimed at the end of two (2) years from the Call Date shall
revert to the general funds of the Corporation, after which reversion the
holders of shares of Series A Preferred Stock so called for redemption shall
look only to the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such certificates shall be exchanged for certificates
representing shares of Common Stock and/or any cash (without interest thereon)
for which such shares have been redeemed in accordance with such notice. If
fewer than all the outstanding shares of Series A Preferred Stock are to be
redeemed, shares to be redeemed shall be selected by the Corporation from
outstanding shares of Series A Preferred Stock not previously called for
redemption by lot or, with respect to the number of shares of Series A Preferred
Stock held of record by each holder of such shares, pro rata (as nearly as may
be) or by any other method as may be determined by the Board of Directors in its
discretion to be equitable. If fewer than all the shares of Series A Preferred
Stock represented by any certificate are redeemed, then a new certificate
representing the unredeemed shares shall be issued without cost to the holders
thereof.
(e) In the case of any redemption pursuant to paragraph (a)(i)
of this Section 5, no fractional shares of Common Stock or scrip representing
fractions of shares of Common Stock shall be issued upon redemption of the
shares of Series A Preferred Stock. Instead of any fractional interest in a
share of Common Stock that would otherwise be deliverable upon redemption of
shares of Series A Preferred Stock, the Corporation shall pay to the holder of
such share an amount in cash (computed to the nearest cent) based upon the
Current Market Price of the Common Stock on the Trading Day immediately
preceding the Call Date. If more than one
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<PAGE>
share shall be surrendered for redemption at one time by the same holder, the
number of full shares of Common Stock issuable upon redemption thereof shall be
computed on the basis of the aggregate number of shares of Series A Preferred
Stock so surrendered.
(f) In the case of any redemption pursuant to paragraph (a)(i)
of this Section 5, the Corporation covenants that any shares of Common Stock
issued upon redemption of shares of Series A Preferred Stock shall be validly
issued, fully paid and non-assessable. The Corporation shall use its best
efforts to list, subject to official notice of issuance, the shares of Common
Stock required to be delivered upon any such redemption of shares of Series A
Preferred Stock, prior to such redemption, upon each national securities
exchange, if any, upon which the outstanding shares of Common Stock are listed
at the time of such delivery.
The Corporation shall take any action necessary to ensure that any
shares of Common Stock issued upon the redemption of Series A Preferred Stock
are freely transferable and not subject to any resale restrictions under the
Act, or any applicable state securities or blue sky laws (other than any shares
of Common Stock issued upon redemption of any Series A Preferred Stock which are
held by an "affiliate" (as defined in Rule 144 under the Act) of the
Corporation).
Section 6. STOCK TO BE RETIRED. All shares of Series A Preferred Stock
which shall have been issued and reacquired in any manner by the Corporation
shall be restored to the status of authorized, but unissued shares of Preferred
Stock, without designation as to series. The Corporation may also retire any
unissued shares of Series A Preferred Stock, and such shares shall then be
restored to the status of authorized but unissued shares of Preferred Stock,
without designation as to series.
Section 7. CONVERSION.
Holders of shares of Series A Preferred Stock shall have the right to
convert all or a portion of such shares into shares of Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, a holder of shares of Series A Preferred Stock shall have the right,
at such holder's option, at any time to convert such shares, in whole or in
part, into the number of fully paid and non-assessable shares of authorized but
unissued shares of Common Stock obtained by dividing the aggregate liquidation
preference (excluding any accumulated, accrued and unpaid dividends) of such
shares by the Conversion Price (as in effect at the time and on the date
provided for in the last clause of paragraph (b) of this Section 7) by
surrendering such shares to be converted, such surrender to be made in the
manner provided in paragraph (b) of this Section 7; PROVIDED, HOWEVER, that the
right to convert shares of Series A Preferred Stock called for redemption
pursuant to Section 5 shall terminate at the close of business on the Call Date
fixed for such redemption, unless the Corporation shall default in making
payment of shares of Common Stock and/or cash payable upon such redemption under
Section 5 hereof.
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<PAGE>
(b) In order to exercise the conversion right, the holder of
each share of Series A Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof elects to convert such
share of Series A Preferred Stock. Unless the shares issuable on conversion are
to be issued in the same name as the name in which such share of Series A
Preferred Stock is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been paid).
Holders of shares of Series A Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such dividend payment record
date and prior to such Dividend Payment Date. However, shares of Series A
Preferred Stock surrendered for conversion during the period between the close
of business on any dividend payment record date and the opening of business on
the corresponding Dividend Payment Date (except shares converted after the
issuance of notice of redemption with respect to a Call Date during such period,
such shares of Series A Preferred Stock being entitled to such dividend on the
Dividend Payment Date) must be accompanied by payment of an amount equal to the
dividend payable on such shares on such Dividend Payment Date. A holder of
shares of Series A Preferred Stock on a dividend payment record date who (or
whose transferee) tenders any such shares for conversion into shares of Common
Stock on such Dividend Payment Date will receive the dividend payable by the
Corporation on such shares of Series A Preferred Stock on such date, and the
converting holder need not include payment of the amount of such dividend upon
surrender of shares of Series A Preferred Stock for conversion. Except as
provided above, the Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for dividends on
the shares of Common Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates for
shares of Series A Preferred Stock as aforesaid, the Corporation shall issue and
shall deliver at such office to such holder, or send on such holder's written
order, a certificate or certificates for the number of full shares of Common
Stock issuable upon the conversion of such shares of Series A Preferred Stock in
accordance with provisions of this Section 7, and any fractional interest in
respect of a share of Common Stock arising upon such conversion shall be settled
as provided in paragraph (c) of this Section 7.
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for shares of
Series A Preferred Stock shall have been surrendered and such notice shall have
been received by the Corporation as aforesaid (and, if applicable, payment of an
amount equal to the dividend payable on such shares shall have been received by
the Corporation as above described), and the person or persons in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such
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<PAGE>
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time on such date and such conversion shall
be at the Conversion Price in effect at such time on such date unless the stock
transfer books of the Corporation shall be closed on that date, in which event
such person or persons shall be deemed to have become holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion Price in
effect on the date on which such shares shall have been surrendered and such
notice shall have been received by the Corporation.
(c) No fractional share of Common Stock or scrip representing
fractions of a share of Common Stock shall be issued upon conversion of the
shares of Series A Preferred Stock. Instead of any fractional interest in a
share of Common Stock that would otherwise be deliverable upon the conversion of
shares of Series A Preferred Stock, the Corporation shall pay to the holder of
such share an amount in cash based upon the Current Market Price of the Common
Stock on the Trading Day immediately preceding the date of conversion. If more
than one (1) share shall be surrendered for conversion at one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Series A Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time to
time as follows:
(i) If the Corporation shall after the Issue Date (A)
pay a dividend or make a distribution on any class of its capital stock
in shares of Common Stock, (B) subdivide its outstanding Common Stock
into a greater number of shares, (C) combine its outstanding Common
Stock into a smaller number of shares or (D) issue any shares of
capital stock by reclassification of its Common Stock, the Conversion
Price in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive
such dividend or distribution or at the opening of business on the day
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be
adjusted so that the holder of any share of Series A Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock (or fraction of a share of Common
Stock) that such holder would have owned or have been entitled to
receive after the happening of any of the events described above had
such share of Series A Preferred Stock been converted immediately prior
to the record date in the case of a dividend or distribution or the
effective date in the case of a subdivision, combination or
reclassification. An adjustment made pursuant to this paragraph (d)(i)
of this Section 7 shall become effective immediately after the opening
of business on the day next following the record date (except as
provided in paragraph (h) below) in the case of a dividend or
distribution and shall become effective immediately after the opening
of business on the day next following the effective date in the case of
a subdivision, combination or reclassification.
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(ii) If the Corporation shall issue after the Issue
Date rights, options or warrants to all holders of Common Stock
entitling them (for a period expiring within 45 days after the record
date described below in this paragraph (d)(ii) of this Section 7) to
subscribe for or purchase Common Stock at a price per share less than
the Fair Market Value per share of the Common Stock on the record date
for the determination of stockholders entitled to receive such rights
or warrants, then the Conversion Price in effect at the opening of
business on the day next following such record date shall be adjusted
to equal the price determined by multiplying (A) the Conversion Price
in effect immediately prior to the opening of business on the day
following the date fixed for such determination by (B) a fraction, the
numerator of which shall be the sum of (X) the number of shares of
Common Stock outstanding on the close of business on the date fixed for
such determination and (Y) the number of shares that the aggregate
proceeds to the Corporation from the exercise of such rights or
warrants for Common Stock would purchase at such Fair Market Value, and
the denominator of which shall be the sum of (XX) the number of shares
of Common Stock outstanding on the close of business on the date fixed
for such determination and (YY) the number of additional shares of
Common Stock offered for subscription or purchase pursuant to such
rights or warrants. Such adjustment shall become effective immediately
after the opening of business on the day next following such record
date (except as provided in paragraph (h) below). In determining
whether any rights or warrants entitle the holders of Common Stock to
subscribe for or purchase Common Stock at less than such Fair Market
Value, there shall be taken into account any consideration received by
the Corporation upon issuance and upon exercise of such rights or
warrants, the value of such consideration, if other than cash, to be
determined in good faith by the Board of Directors.
(iii) If the Corporation shall distribute to all
holders of its Common Stock any shares of capital stock of the
Corporation (other than Common Stock), evidence of its indebtedness or
assets (including cash, but excluding cash dividends and cash
distributions to the extent the same constitute Permitted Common Stock
Cash Distributions and cash dividends which result in a payment of an
equal cash dividend to the holders of the Series A Preferred Stock
pursuant to paragraph (a)(ii) of Section 3 hereof) or rights or
warrants to subscribe for or purchase any of its securities (excluding
those rights and warrants issued to all holders of Common Stock
entitling them for a period expiring within forty-five (45) days after
the record date referred to in paragraph (d)(ii) of this Section 7
above to subscribe for or purchase Common Stock, which rights and
warrants are referred to in and treated under such paragraph (d)(ii)
above) (any of the foregoing being hereinafter in this paragraph
(d)(iii) called the "Distribution"), then in each such case the
Conversion Price shall be adjusted so that it shall equal the price
determined by multiplying (A) the Conversion Price in effect
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such Distribution by
(B) a fraction, the numerator of which shall be the Fair Market Value
per share of Common Stock on the record date mentioned below less the
then fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board resolution),
of the portion of the capital
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stock or assets or evidences of indebtedness so distributed or of such
rights or warrants applicable to one (1) share of Common Stock, and the
denominator of which shall be the Fair Market Value per share of Common
Stock on the record date mentioned below. Such adjustment shall become
effective immediately at the opening of business on the Business Day
next following (except as provided in paragraph (h) below) the record
date for the determination of stockholders entitled to receive such
Distribution. For the purposes of this paragraph (d)(iii), the
distribution of a right or warrant to subscribe or purchase any of the
Corporation's securities, which is distributed not only to the holders
of the Common Stock on the date fixed for the determination of
stockholders entitled to such Distribution of such right or warrant,
but also is distributed with shares of Common Stock delivered to a
Person converting shares of Series A Preferred Stock after such
determination date, shall not require an adjustment of the Conversion
Price pursuant to this paragraph (d)(iii); PROVIDED that if on the
date, if any, on which a person converting shares of Series A Preferred
Stock such person would no longer be entitled to receive such right or
warrant with shares of Common Stock (other than as a result of the
termination of all such right or warrant), a distribution of such
rights or warrants shall be deemed to have occurred and the Conversion
Price shall be adjusted as provided in this paragraph (d)(iii) and such
day shall be deemed to be "the date fixed for the determination of the
stockholders entitled to receive such distribution" and "the record
date" within the meaning of the two preceding sentences.
(iv) No adjustment in the Conversion Price shall be
required unless such adjustment would require a cumulative increase or
decrease of at least 1% in such price; PROVIDED, HOWEVER, that any
adjustments that by reason of this paragraph (d)(iv) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment until made; and PROVIDED, FURTHER, that any
adjustment shall be required and made in accordance with the provisions
of this Section 7 (other than this paragraph (d)(iv)) not later than
such time as may be required in order to preserve the tax-free nature
of a distribution to the holders of shares of Common Stock.
Notwithstanding any other provisions of this Section 7, the Corporation
shall not be required to make any adjustment of the Conversion Price
for the Issuance of any shares of Common Stock pursuant to any plan
providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional
amounts in shares of Common Stock under such plan. All calculations
under this Section 7 shall be made to the nearest cent (with $.005
being rounded upward) or to the nearest one-tenth of a share (with .05
of a share being rounded upward), as the case may be. Anything in this
paragraph of this Section 7 to the contrary notwithstanding, the
Corporation shall be entitled, to the extent permitted by law, to make
such reductions in the Conversion Price, in addition to those required
by this paragraph (d), as it in its discretion shall determine to be
advisable in order that any stock dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or
warrants to purchase stock or securities, or a distribution of other
assets (other than cash dividends) hereafter made by the Corporation to
its stockholders shall not be taxable, or if that is not possible, to
diminish any income taxes that are otherwise payable because of such
event.
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(e) If the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation, statutory share exchange,
issuer or self tender offer for all or a substantial portion of the shares of
Common Stock outstanding, sale of all or substantially all of the Corporation's
assets or recapitalization of the Common Stock, but excluding any transaction as
to which paragraph (d)(i) of this Section 7 applies) (each of the foregoing
being referred to herein as a "TRANSACTION"), in each case as a result of which
shares of Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), each
share of Series A Preferred Stock which is not converted into the right to
receive stock, securities or other property in connection with such Transaction
shall thereupon be convertible into the kind and amount of shares of stock,
securities and other property (including cash or any combination thereof)
receivable upon consummation of such Transaction by a holder of that number of
shares, or fraction thereof, of Common Stock into which one (1) share of Series
A Preferred Stock was convertible immediately prior to such Transaction,
assuming such holder of Common Stock (i) is not a Person with which the
Corporation consolidated or into which the Corporation merged or which merged
into the Corporation or to which such sale or transfer was made, as the case may
be ("CONSTITUENT PERSON"), or any affiliate of a Constituent Person and (ii)
failed to exercise such holder's rights of election, if any, as to the kind or
amount of stock, securities and other property (including cash) receivable upon
such Transaction (provided that if the kind or amount of stock, securities and
other property (including cash) receivable upon such Transaction is not the same
for each share of Common Stock of the Corporation held immediately prior to such
Transaction by other than a Constituent Person or an affiliate thereof and in
respect of which such rights of election shall not have been exercised
("NON-ELECTING SHARE"), then for the purpose of this paragraph (e) the kind and
amount of stock, securities and other property (including cash) receivable upon
such Transaction by each Non-Electing Share shall be deemed to be the kind and
amount so receivable per share by plurality of the Non-Electing Shares. The
Corporation shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this paragraph (e), and it
shall not consent or agree to the occurrence of any Transaction until the
Corporation has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Series A
Preferred Stock that will contain provisions enabling the holders of the Series
A Preferred Stock that remain outstanding after such Transaction to convert into
the consideration received by holders of Common Stock at the Conversion Price in
effect immediately prior to such Transaction. The provisions of this paragraph
(e) shall similarly apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any
other distribution) on the Common Stock (other than cash dividends and
cash distributions to the extent the same constitute Permitted Common
Stock Cash Distributions); or
(ii) the Corporation shall authorize the granting to
the holders of the Common Stock of rights or warrants to subscribe for
or purchase any shares of any class or series of capital stock or any
other rights or warrants; or
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(iii) there shall be any reclassification of the
Common Stock or any consolidation or merger to which the Corporation is
a party and for which approval of any stockholders of the Corporation
is required, or a statutory share exchange, or an issuer or self tender
offer by the Corporation for all or a substantial portion of its
outstanding shares of Common Stock (or an amendment thereto changing
the maximum number of shares sought or the amount or type of
consideration being offered therefor) or the sale or transfer of all or
substantially all of the assets of the Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to each holder of shares of Series A Preferred Stock at such
holder's address as shown on the stock records of the Corporation, as promptly
as possible, but at least fifteen (15) days prior to the applicable date
hereinafter specified, a notice stating (A) the record date for the payment of
such dividend, distribution or rights or warrants, or, if a record date is not
established, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, statutory share
exchange, sale, transfer, liquidation, dissolution or winding up or (C) the date
on which such tender offer commenced, the date on which such tender offer is
scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto). Failure
to give or receive such notice or any defect therein shall not affect the
legality or validity of the proceedings described in this Section 7.
(g) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with the Transfer Agent an
officer's certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment which
certificate shall be conclusive evidence of the correctness of such adjustment
absent manifest error. Promptly after delivery of such certificate, the
Corporation shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to each holder of shares of Series A Preferred Stock at
such holder's last address as shown on the stock records of the Corporation.
(h) In any case in which paragraph (d) of this Section 7
provides that an adjustment shall become effective on the day next following the
record date for an event, the Corporation may defer until the occurrence of such
event (A) issuing to the holder of any share of Series A Preferred Stock
converted after such record date and before the occurrence of such event the
additional Common Stock issuable upon such conversion by reason of the
adjustment
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required by such event over and above the Common Stock issuable upon such
conversion before giving effect to such adjustment and (B) paying to such holder
any amount of cash in lieu of any fraction pursuant to paragraph (c) of this
Section 7.
(i) There shall be no adjustment of the Conversion Price in
case of the issuance of any capital stock of the Corporation in a
reorganization, acquisition or other similar transaction except as specifically
set forth in this Section 7. If any action or transaction would require
adjustment of the Conversion Price pursuant to more than one paragraph of this
Section 7, only one adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value.
(j) If the Corporation shall take any action affecting the
Common Stock, other than action described in this Section 7, that in the opinion
of the Board of Directors would materially adversely affect the conversion
rights of the holders of Series A Preferred Stock, the Conversion Price for the
Series A Preferred Stock may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time as the Board of Directors, in its sole
discretion, may determine to be equitable under the circumstances.
(k) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Stock solely for the purpose of effecting conversion of the
Series A Preferred Stock, the full number of shares of Common Stock deliverable
upon the conversion of all outstanding shares of Series A Preferred Stock not
theretofore converted into Common Stock. For purposes of this paragraph (k), the
number of shares of Common Stock that shall be deliverable upon the conversion
of all outstanding shares of Series A Preferred Stock shall be computed as if at
the time of computation all such outstanding shares were held by a single
holder.
The Corporation covenants that any shares of Common Stock issued upon
conversion of the shares of Series A Preferred Stock shall be validly issued,
fully paid and non-assessable.
The Corporation shall use its best efforts to list the shares of Common
Stock required to be delivered upon conversion of the shares of Series A
Preferred Stock, prior to such delivery, upon each national securities exchange,
if any, upon which the outstanding shares of Common Stock are listed at the time
of such delivery.
The Corporation shall take any action necessary to ensure that any
shares of Common Stock issued upon conversion of shares of Series A Preferred
Stock are freely transferable and not subject to any resale restrictions under
the Act, or any applicable state securities or blue sky laws (other than any
shares of Common Stock which are held by an "affiliate" (as defined in Rule 144
under the Act)).
(l) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Common Stock or other securities or property on conversion or
redemption of shares of Series A Preferred Stock pursuant
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hereto; PROVIDED, HOWEVER, that the Corporation shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock or other securities or property in a name
other than that of the holder of the shares of Series A Preferred Stock to be
converted or redeemed, and no such issue or delivery shall be made unless and
until the person requesting such issue or delivery has paid to the Corporation
the amount of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
Section 8. RANKING. Any class or series of capital stock of the
Corporation shall be deemed to rank:
(a) prior or senior to the Series A Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Series A Preferred Stock;
(b) on a parity with the Series A Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Series A Preferred Stock, if the holders of such class of stock or
series and the Series A Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation preferences, without preference or priority of one over the
other ("PARITY STOCK"); and
(c) junior to the Series A Preferred Stock, as to the payment
of dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such stock or series shall be Common Stock or if the holder of
Series A Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such class or series
("JUNIOR STOCK").
Section 9. VOTING.
(a) If and whenever six (6) quarterly dividends (whether or
not consecutive) payable on the Series A Preferred Stock or any series or class
of Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two (2) (if not already increased by
reason of a similar arrearage with respect to any Parity Stock) and the holders
of shares of Series A Preferred Stock, together with the holders of shares of
every other series of Parity Stock (any other such series, the "VOTING PREFERRED
STOCK"), voting as a single class regardless of series, shall be entitled to
elect the two (2) additional directors to serve on the Board of Directors, by
the vote of a plurality of the votes cast by the holders of the Series A
Preferred Stock and the Voting Preferred
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Stock, at any annual meeting of stockholders or special meeting held in place
thereof, or at a special meeting of the holders of the Series A Preferred Stock
and the Voting Preferred Stock called as hereinafter provided. Whenever all
arrears in dividends on the Series A Preferred Stock and the Voting Preferred
Stock then outstanding shall have been paid and dividends thereon for the
current quarterly dividend period shall have been paid or declared and set apart
for payment, then the right of the holders of the Series A Preferred Stock and
the Voting Preferred Stock to elect such additional two (2) directors shall
cease (but subject always to the same provision of the vesting of such voting
rights in the case of any similar future arrearages in six (6) quarterly
dividends), and the terms of office of all persons elected as directors by the
holders of the Series A Preferred Stock and the Voting Preferred Stock shall
forthwith terminate and the number of the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Series A Preferred Stock and the Voting Preferred Stock, the
Secretary of the Corporation may, and upon the written request of any holder of
Series A Preferred Stock (addressed to the Secretary at the principal office of
the Corporation) shall, call a special meeting of the holders of the Series A
Preferred Stock and of the Voting Preferred Stock for the election of the two
(2) directors to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the stockholders or as required by law. If any such special meeting
required to be called as above provided, shall not be called by the Secretary
within twenty (20) days after receipt of any such request, then any holder of
Series A Preferred Stock may call such meeting, upon the notice above provided,
and for that purpose shall have access to the stock books of the Corporation.
The directors elected at any such special meeting shall hold office until the
next annual meeting of the stockholders or special meeting held in lieu thereof
if such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Series A
Preferred Stock and the Voting Preferred Stock, a successor shall be elected by
the Board of Directors, upon the nomination of the then remaining director
elected by the holders of the Series A Preferred Stock and the Voting Preferred
Stock or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as above provided.
So long as any shares of Series A Preferred Stock are
outstanding, the number of directors of the Corporation shall at all times be
such that the exercise, by the holders of shares of Series A Preferred Stock and
the holders of Voting Preferred Stock, of the right to elect directors under the
circumstance provided in this Section 9(a) will not contravene any provisions of
the Maryland General Corporation Law or the Articles of Incorporation.
(b) So long as any shares of Series A Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Articles of Incorporation, as amended, the affirmative vote of
at least 66 2/3% of the votes entitled to be cast by the holders of the Series A
Preferred Stock and the Voting Preferred Stock, at the time outstanding, acting
as a single class regardless of series, given in person or by proxy, either in
writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
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(i) Any amendment, alteration or repeal of any of the
provisions of these Articles Supplementary to the Articles of
Incorporation, the Articles of Incorporation or the Bylaws of the
Corporation that materially and adversely affects the voting powers,
rights or preferences of the holders of the Series A Preferred Stock or
the Voting Preferred Stock; PROVIDED, HOWEVER, that the amendment of
the provisions of the Articles of Incorporation so as to authorize or
create, or to increase the authorized amount of, any Junior Stock or
any shares of any class ranking on a parity with the Series A Preferred
Stock or the Voting Preferred Stock shall not be deemed to materially
adversely affect the voting powers, rights or preferences of the
holders of Series A Preferred Stock, and PROVIDED FURTHER, that if any
such amendment, alteration or repeal would materially adversely affect
any voting powers, rights or preferences of the Series A Preferred
Stock or another series of Voting Preferred Stock that are not enjoyed
by some or all of the other series which otherwise would be entitled to
vote in accordance herewith, the affirmative vote of at least 66 2/3%
of the votes entitled to be cast by the holders of all series similarly
affected, similarly given, shall be required in lieu of the affirmative
vote of at least 66 2/3% of the votes entitled to be cast by the
holders of the shares of Series A Preferred Stock and the Voting
Preferred Stock which otherwise would be entitled to vote in accordance
herewith; or
(ii) The authorization or creation of, or the
increase in the authorized amount of, any shares of any class or any
security convertible into shares of any class ranking prior or senior
to the Series A Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation or in the
payment of dividends;
PROVIDED, HOWEVER, that no such vote of the holders of Series A Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such prior shares or
convertible security is to be made, as the case may be, provision is made for
the redemption of all shares of Series A Preferred Stock at the time
outstanding.
For purposes of the foregoing provisions of this Section 9,
each share of Series A Preferred Stock shall have one (1) vote per share, except
that when any other series of preferred stock shall have the right to vote with
the Series A Preferred Stock as a single class on any matter, then the Series A
Preferred Stock and such other series shall have with respect to such matters
one (1) vote per Twenty-Five Dollars ($25.00) of stated liquidation preferences.
Except as otherwise required by applicable law or as set forth herein, the
holders of the Series A Preferred Stock shall not have any voting rights and
powers, and the approval or consent of the holders thereof shall not be required
for the taking of any corporate action.
Section 10. RECORD HOLDERS. The Corporation and the Transfer Agent may
deem and treat the record holder of any share of Series A Preferred Stock as the
true and lawful owner thereof for all purposes, and neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
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IN WITNESS WHEREOF, U.S. Restaurant Properties, Inc. has caused these
presents to be signed in its name and on its behalf by its President and Chief
Executive Officer and attested to by its Secretary on this 11th day of November,
1997.
U.S. RESTAURANT PROPERTIES, INC.
By: /s/ Robert J. Stetson
----------------------------------
Name: Robert J. Stetson
Title: President and Chief Executive Officer
Attest:
/s/ Fred H. Margolin
- ----------------------------
Name: Fred H. Margolin
Title: Secretary
The UNDERSIGNED, President and Chief Executive Officer of U.S.
Restaurant Properties, Inc., who executed on behalf of the Corporation the
Articles Supplementary of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ Robert J. Stetson
----------------------------------------
Robert J. Stetson
President and Chief Executive Officer
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